Many homeowners are considering refinancing their mortgages, as low mortgage rates continue. However, the economic uncertainty due COVID-19 led Fannie Mae and Freddie Mac to introduce a new adverse market fee on refinanced mortgages, which will now be implemented 1 December rather than the originally planned 1 September.

As low mortgage rates have many homeowners looking to refinance their mortgages, the economic uncertainty due to the Coronavirus led Fannie Mae and Freddie Mac to introduce a new adverse market fee on refinanced mortgages, which will now be implemented 1 December rather than the originally planned 1 September. The fee, which will increase the total loan payment on mortgage refinancing by 0.5%, has faced backlash from the real estate and mortgage industry and will likely affect the mortgage refinancing payments of American workers.

In addition the postponed date, the Federal Housing and Finance Agency (FHFA) directed Fannie and Freddie to exempt refinance loans with balances below $125,000 as well as refinance products Home Ready and Home Possible. The fee on the total loan amount to both cash-out and no-cash out refinances was projected to increase interest rates on homebuyers on average around $1,400 per mortgage, according to the Mortgage Bankers Association.

The notice to lenders released by Fannie and Freddie cited risk management and loss forecasting precipitated by COVID-19-related economic and market uncertainty as the rationale behind the controversial fee increase. This fee has faced considerable criticism from industry groups such as the Mortgage Bankers Association whose President and CEO has said that the fee runs counter to the Trump administration’s recent executive orders aimed at supporting struggling homeowners. The White House itself has even condemned the fee, with an official saying that the administration would be reviewing it.