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the Federal Housing Finance Agency (FHFA) officially waives the controversial unfavorable market refinancing fees of Freddie Mac and Fannie Mae.
Starting in August, lenders will no longer be required to pay government-sponsored companies (GSEs) a 50 basis point fee when they issue refinanced mortgages.
FHFA Acting Director Sandra Thompson said eliminating the fee would help families take advantage of the current low rate environment.
“Today’s action reinforces the FHFA’s priority of supporting affordable housing while simultaneously protecting the safety and soundness of businesses,” said Thompson.
The elimination of fees is one of many changes the mortgage industry has asked the federal regulator to make. Pete Mills, senior vice president of residential policy at the Mortgage Banker’s Association, said the move was “very positive for borrowers” and “appreciated” by the mortgage industry.
“The exit process from forbearance has gone well, the exit rate is accelerating and the job market is strong,” Mills said. “All of these things belie the idea that we are still in an unfavorable market.”
The FHFA started charging unfavorable market fees on most refinanced mortgages last year, due to “increased costs and risks” for the agency as a result of Covid-19.
Critics of the policy, however, said it was simply a way for GSEs to increase their capital levels during last year’s historic refinancing boom.
GSEs also performed well throughout the pandemic. In the first quarter of 2021, Fannie Mae reported a net profit of $ 5 billion and Freddie Mac reported a profit of $ 2.8 billion.
Eliminating unfavorable market fees is one of the first decisive policy steps the agency has taken since a long-awaited Supreme Court ruling allowed President Joe Biden to fire the FHFA director at will. Hours after the decision, Biden dismissed the director of the FHFA and appointed by Trump, Mark Calabria, a libertarian economist, and installed Thompson as head of the agency.
During his first few weeks as head of the federal regulatory agency, Thompson said expanding access to credit in communities of color was a top priority.
In June, the FHFA also announced that its providers must comply with additional procedural requirements from the Consumer Financial Protection Bureau governing the foreclosure process a full month before it goes into effect.
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