After Fannie Mae and Freddie Mac announced an added 50 basis point fee to all refinances, the housing industry was quick to react.
Today, the National Association of Mortgage Brokers announced growing support behind its campaign to reverse the newly announced GSE fee.
Since the call-to-action was sent out on August 13th, NAMB has seen a significant increase in growth from its supporters, rising to more than 10,000 in just twenty-four hours.
“By adding this 1/2 percent tax on all refinance transactions in the midst of a pandemic, the FHFA and GSEs are harming our economic recovery,” NAMB President Rocke Andrews said. “This mistake in policy needs to be reversed immediately.”
The fee assessed by the government sponsored enterprises adds a 50 basis point increase to the refinance mortgages it purchases, but the mortgage giants don’t charge borrowers directly since they don’t originate loans. This fee is placed on the lender, which then has the option of passing on the charge to the borrower or eating the cost.
The Mortgage Bankers Association also joined together with various members of the housing industry to oppose the move.
“Wednesday night’s surprise announcement by Fannie Mae and Freddie Mac (the GSEs) conflicts with the Administration’s recent executive actions urging federal agencies to take all measures within their authority to support struggling homeowners,” the group said in a joint statement. “The additional 0.5% fee on Fannie Mae and Freddie Mac refinance mortgages will raise costs for families trying to make ends meet in these challenging times. In addition, the September 1 effective date means that thousands of borrowers who did not lock in their rates could face unanticipated cost increases just days from closing.”
“In spite of the fragility of the national economic recovery, the mortgage market has been able to withstand many of the most severe effects of the COVID-19 pandemic,” the group continued. “The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the GSEs and taxpayers. At a time when the Federal Reserve is purchasing $40 billion in agency mortgage-backed securities per month to help reduce the cost of buying or refinancing a home and stimulate the broader economy, this action by the GSEs raises those costs, contradicting and undermining Fed policy.”
“The pricing increase is particularly harmful for our nation’s low- and moderate-income homeowners and for the emerging, but unsteady improvements to the national economy,” they concluded. “The undersigned organizations strongly urge the Federal Housing Finance Agency, which had to approve this policy, to withdraw this ill-timed, misguided directive.”
Members of the group issuing the joint statement include: American Bankers Association, American Land Title Association, Center for Responsible Lending, Community Housing Lenders Association, Credit Union National Association, Housing Policy Council, Independent Community Bankers of America, Manufactured Housing Institute, MBA, National Association of Affordable Housing Lenders, National Association of Federally-Insured Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Real Estate Brokers, National Association of Realtors, National Community Stabilization Trust, National Council of State Housing Agencies, National Fair Housing Alliance, National Housing Conference and Real Estate Services Providers Council.
The Senate Committee on Banking, Housing and Urban Affairs raised some concerns of its own today as Sen. Mike Crapo, R-Idaho, sent the following questions to FHFA Director Mark Calabria:
- Why did Fannie Mae and Freddie Mac request a new adverse market refinance fee?
- How was the 50 basis point pricing determined to be appropriate?
- Why was it determined that the change should take effect for loans purchased on or after September 1st?
- What is FHFA’s assessment of the impact the price increase will have in the marketplace, and for Fannie Mae and Freddie Mac in the next quarter?
- Would marketplace disruption be reduced or minimized if the new price regime took effect on a date later than September 1st, or if it applied instead to applications taken on or after September 1st?