Homeowners who take advantage of low mortgage rates by refinancing could be in for a surprise, according to a statement from the Wisconsin Bankers Association.
Freddie Mac and Fannie Mae are now imposing a new “adverse market refinance fee” on all mortgages refinances, which homeowners will be paying when the loan closes. For the average homeowner, this fee could add $1,400 to the cost of the refinancing. The WBA issued the statement after the Federal Housing Finance Agency announced a new loan-level price adjustment fee of 0.5% basis points to be imposed on cash-out and non-cash-out refinance mortgage transactions that Fannie Mae and Freddie Mac purchase.
FHFA stated the fee is a result of risk management and loss forecasting by Fannie and Freddie related to economic and market uncertainty as a result of COVID-19. The fee is effective for loans purchased or delivered on or after Sept. 1, 2020.
