Read more: New Fannie, Freddie fees could cost borrowers big – analysis
“The justification for the fee when it was sprung on the market was that it was necessary to pay for the costs of forbearance and pandemic-related payment relief incurred by Fannie Mae and Freddie Mac,” he added. “But the homeowners punished were those that weren’t high risk, weren’t in need of forbearance or payment relief and were, in fact, reducing their risk to the mortgage finance marketplace by reducing their rates and monthly payments. It never passed the smell test to begin with.”
Mortgage organizations appear to be over the moon about the agency’s decision.
“We have called on FHFA to rescind this policy and appreciate that they have reviewed the data and been responsive to our request,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association. “With less than 2% of GSE loans in forbearance and continued home price appreciation resulting in significant borrower equity, there is no need for the fee.”
The FHFA acknowledged that it is high time to end the fee, as the measure taken by the agency and GSEs has been effective in mitigating the impact of the pandemic. In April, the FHFA announced a new refinance option for low-income borrowers that included a lower interest rate and lower monthly payment. The new refi offering waived the adverse market fee for borrowers with balances at or below $300,000.