(Aug. 28, 2020) Earlier this month, Fannie Mae and Freddie Mac announced plans to impose a new 0.5 percent adverse-market fee on mortgage refinances starting Sept. 1.
In most cases, this would cost homeowners thousands of dollars in additional fees to be able to refinance their mortgages.
The National Association of Realtors President Vince Malta, a broker at Malta & Co., Inc., in San Francisco, issued the following statement in response: “This is very disappointing and the absolute wrong policy at the wrong time. This fee could cost homeowners thousands of dollars, which will destabilize the market and take away opportunity. It also directly contravenes the administration’s own directives for federal agencies to do no harm to homeowners during the coronavirus crisis.”
Fannie Mae and Freddie Mac play a key role in the secondary mortgage market, which is crucial in providing capital for mortgage lending.
During the housing finance sector’s collapse, private capital withdrew from having a significant, competing role with the GSEs.
Without the government’s support of the GSEs and FHA-insured loans, which currently constitutes a large portion of the market space, there would be almost no capital available for mortgage lending.
Malta further clarified that imposing this new fee would ultimately hurt homebuyers in underserved markets.
“It is especially troubling since the GSE’s use their profits from refinances to support homebuyers in underserved markets-meaning those communities already suffering the most will be harmed the most by this action,” Malta said. “Home values and residential real estate are a rock for the American economy right now. We should do everything we can to lower costs for households during this crisis, not make homeownership more expensive.”
– Lauren Bunting is an Associate Broker with Atlantic Shores Sotheby’s International Realty in Ocean City.