Fannie, Freddie to Drop Mortgage – Refinance Fee

The Federal Housing Finance Agency has  determined that eliminating the fee that the Federal Government imposed during the Covid-19 pandemic through Fannie Mae and Freddie Mac will help families take advantage of low-interest rates. Acting Director Sandra L. Thompson said, “The Covid-19 pandemic financially exacerbated America’s affordable housing crisis.”

The 0.5% fee that was imposed in December added approximately $1,400 to the average cost of refinancing of any loans that were backed by Fannie Mae or Freddie Mac as calculated by the Mortgage Bankers Association.

Because interest rates remain fairly low and most housing values have increased, there is often a sum of money locked in a home, as the Biden Administration explained. Thus, additional pressure has been placed on the agency to expand affordable housing. Fannie and Freddie assist buyers by purchasing many mortgages from lenders and subsequently guaranteeing them. In turn, borrowing to buy a home is encouraged,  because of the lower borrowing costs when the Federal government is involved.

As a lender, we are watching the elimination of fees by the Federal Housing Finance Agency because there is concern in the industry that some lenders may use this opportunity to increase their own margins. Thus, working with an advisor who can explain terms plainly and who has a stake in the community may be in your best interest.

The fee was generated by the FHFA and created $5 million for every $1 billion of eligible mortgages purchased by Fannie and Freddie. The fee reduction supports the mission of the FHFA to help consumers in trying to become homeowners.

It is expected that the Biden Administration will seek to ease underwriting standards to additionally boost home-ownership. The FHFA had previously raised capital requirements and limited the risky mortgages that Fannie and Freddie could acquire in the interest of protecting taxpayers, it said. The conflict offers yet another great reason to work with a mortgage advisor who can truly assist a community member in best understanding his or her affordability level.

I never meet anyone who wants to live in a home for 90 days and then lose it to foreclosure. The goal is to become a homeowner and to enjoy all of the comforts that homeownership brings.

There is a lot of opportunity in the marketplace when it comes to being able to buy a home. Knowing what it means to work with the various offerings can be helped by having a trusted advisor. I have a list of questions I encourage people who are seeking a mortgage should be asking.

You should know that there is also a new product that banks are utilizing to spread out the risk of borrower’s defaulting on mortgages called transfer securities. Some of these new products bring back memories of the financial products that existed before the 2009 financial meltdown. Many investors in the market believe that niche mortgage products are supported by a surging housing market and improved borrowers’ credit quality.

At Finance of America, we are seeing those who are seeking homeownership find better products through Finance of America, because of the many options available today. Know your options. Know your lending opportunities. Know the resources within your community.

Be sure to get to know a licensed advisor that you know serves your best interests, your community, and has history in the community as well as will be there for you for the duration. Call 360-607-9312 or email MPattullo@FinanceOfAmerica.com for help preparing your credit application to best evaluate your mortgage options. We are your local advisor.

We lend where we live,
Mike