Last Updated: January 18, 2022
Mortgage rates plunge following the news that Fannie Mae and Freddie Mac will eliminate the controversial refinance fee.
On Friday 16th of July, 2021, the Federal Housing Finance Agency (FHFA), came up with an announcement that the formally known ‘adverse market fee’ will be eliminated as of August 1st.
When the fee was first announced on the 1st of December 2020, it had one goal in mind. The surcharge was designed to offset the losses of the mortgage giants, Fannie Mae and Freddie Mac, whose losses rose as the pandemic reached its peak.
The fee, however, added an extra charge of 0.5% to the total refinance costs, so that if borrowers were refinancing a loan of $250,000, the extra charge meant they would owe an extra $1,250, making it even harder for people with bad credit to get a refinance mortgage.
Saying Goodbye to the Refi Fee Next Month
“The COVID-19 pandemic financially exacerbated America’s affordable housing crisis,” said Acting Director Sandra L. Thompson. She continues, “Eliminating the Adverse Market Refinance Fee will help families take advantage of the low-rate environment to save more money. Today’s action furthers FHFA’s priority of supporting affordable housing while simultaneously protecting the safety and soundness of the Enterprises.”
The reason why FHFA decided to eliminate the surcharge was to allow families to save money. Thompson’s agency strongly believes that those who charge borrowers with a fee will pass cost savings back to their borrowers.
The mortgage interest rates have fallen lower than ever, which makes it the right time for those willing to buy a house to do some research on it.
However, not all refinancers benefit from the elimination of the fee, as it never applied to some of them. Those whose loan was valued at $125,000 or less and those whose loan is backed by the government were never required to pay the extra charges that became effective last December.