“Santa Claus came early for homeowners looking to refinance”

The Federal Housing Finance Agency (FHFA) has eliminated what are known as “adverse market refinancing fees,” a huge boon to homeowners looking to refinance their mortgages.

The refinancing fee was implemented in December as a way to pay off some of the mortgage relief linked to the pandemic. The agency calculated the fee by taking 0.5% of a loan balance and adding it to refinance costs.

“To save families more money, lenders will no longer be required to pay [Fannie Mae and Freddie Mac] a 50 basis point fee when offering refinanced mortgages, ”the FHFA said last week in a press release.

The FHFA said the fees and other policies put in place for the pandemic “were effective enough to warrant a quick conclusion” of those fees.

“The FHFA expects that lenders who charged the fees to borrowers will pass the cost savings on to borrowers,” the agency said.

“Santa Claus came early for homeowners looking to refinance their mortgages,” wrote Greg McBride, chief financial analyst at Bankrate, in response to the move.

The fees, McBride said, often meant borrower rates were often an eighth of a percentage point higher than they might otherwise be. In real terms, the effect is relatively small but not negligible for some – around $ 20 per month for a loan of $ 300,000.

McBride was among the critics of the policy.

“The rationale for the fees when they were introduced to the market was that there was a need to pay the costs of forbearance and relief from payments related to the pandemic incurred by Fannie Mae and Freddie Mac,” he said. he declares. “But the homeowners punished were the ones who weren’t at high risk, didn’t need forbearance or payment relief, and were actually reducing their risk to the mortgage market by lowering their rates and monthly payments.” . He never passed the odor test to begin with.

McBride wrote that the savings from eliminating fees should go back into the pockets of people with mortgages. However, some lenders may not pass the savings on, which is why it’s important to shop around and consider different lenders, McBride said.

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Ethan Wolff Mann is a writer at Yahoo Finance who focuses on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.

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