
The FHFA (Federal Housing Financing Agency) announced last month that effective August 1, 2021 it will be eliminating the 50 basis point Adverse Market Refinance Fee for refinance mortgage loans. The FHFA notes that the fee imposed on lenders originally was designed to cover losses projected as a result of the COVID-19 pandemic. However, the FHFA states that “the success of FHFA and Fannie Mae and Freddie Mac’s COVID-19 policies reduced the impact of the pandemic and were effective enough to warrant an early conclusion of the Adverse Market Refinance Fee.”
So what exactly is the Adverse Market Refinance Fee? In August 2020, the FHFA unveiled its proposal for a new Adverse Market Refinance Fee. This new fee that applied to all Fannie and Freddie-backed conforming refinance mortgages, was equal to 0.50% of a borrower’s loan amount. So for an average $250,000 refinance, this accounted for an additional $1,250 in costs. However, few lenders actually charged the fee upfront. Many would simply charge higher refinance interest rates (0.25% on average) rather than asking homeowners to pay extra at closing. Either way, this fee was costing homeowners a lot of money and made the possibility of refinancing much less attractive for many homeowners.
The FHFA also advises that the “vast majority” of Fannie Mae and Freddie Mac borrowers have successfully exited COVID-19 forbearance and that in April 2021 approximately 2% of single-family mortgages backed by Fannie Mae and Freddie Mac remained in forbearance. This number is down from a high of approximately 5% back in May 2020.
Interest rates remain near historic all-time low levels. Homeowners still looking to refinance can contact Coast2Coast Lending 7 days a week by calling the number above, or simply submit the Quick Request Form on this page.
One of our dedicated refinance specialists can review your options and see if a refinance makes sense for you. The entire review process is often done in less than 10 min.