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HousingWire's 2021 Spring Summit

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An Honest Conversation on minority homeownership

In this episode, Lloyd interviews a senior research associate in the Housing Finance Policy Center at the Urban Institute about the history and data behind minority homeownership.

MortgagePolitics & Money

Is the FHFA about to delay the refi fee?

Agency has faced serious pushback from industry and Congress

According to reporting by the Wall Street Journal on Saturday, the Federal Housing Finance Agency has been communicating with mortgage industry groups about delaying the implementation of a fee which would add a 0.5% surcharge to refinance mortgages sold to Fannie Mae and Freddie Mac starting Sept. 1.

According to the article, the FHFA is considering a delay to the adverse market fee implementation date, but is not planning to rescind it. The FHFA has been widely criticized both for the reasoning given for the fee and the short three-week notice to lenders and homeowners already in the middle of a refinance process.

Dave Stevens, former president and CEO of the Mortgage Bankers Association and former commissioner of the Federal Housing Administration, told HousingWire on Saturday that, “If true, it seems clear that Director Calabria listened to industry concerns about the impact of this short time frame to implement. And while the logic of the fee remains in question, this is a good sign and hopefully will lead to a change in behavior going forward where impact assessment conversations can take place prior to major policy announcements.”

Following the FHFA’s announcement of the fee on Aug. 12, the mortgage industry organized a full-out campaign to get the FHFA and GSEs to reconsider the fee, with national and state lender associations mobilizing members to reach out to FHFA and congressional leaders.

On Aug. 20, the heads of Fannie and Freddie addressed industry concerns, but the response did nothing to quell opposition to the move and this week Capitol Hill joined the fray.

On Wednesday, a group of prominent senators including Sherrod Brown, (D-OH) and Elizabeth Warren (D-MA) sent a letter to FHFA Director Mark Calabria questioning the decision to add the fee on such short notice and asking for specific feedback on the FHFA’s reasoning behind the action.

The group of senators asked specifically for FHFA to describe the market conditions they are trying to address with this fee, and how “a direct charge to homeowners was determined to be the most appropriate way to address those conditions.”

The Senators also asked why the FHFA and GSEs “believe that individual homeowners are better suited to bear part of the cost of this economic downturn than the Enterprises.”

On Friday, 41 bipartisan members of Congress signed a letter to Calabria outlining their objections to the fee.

“In announcing this new ‘Adverse Market Refinance Fee,’ Fannie Mae and Freddie Mac (commonly referred to as government-sponsored enterprises, or the GSEs) cite market and economic uncertainty, along with higher risk and costs,” the letter states. However, when this policy was announced, no further explanation was provided to justify the additional cost to homeowners.

“On the contrary, homeowners saving hundreds of dollars per month on their mortgages are reducing their debt-to-income ratio, which reduces risk to investors. Furthermore, lenders report reverifying employment within 24 hours of closing, further reducing credit risk,” the letter continues.

“Fannie Mae, Freddie Mac, and Federal Housing Finance Agency (FHFA) have taken crucial steps throughout this pandemic to protect homeowners and our economy. That is why we were surprised by this announcement that will make refinancing a mortgage more difficult and more expensive for even the most creditworthy homeowners.

“The best thing we can do for the fiscal position of the United States is to allow the economy to recover as quickly and robustly as possible. To that end, we request that FHFA and the GSEs reconsider this fee as our country recovers from COVID-19.”

The White House weighed in shortly after the fee was announced, saying it had “serious concerns.”

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