Federal Housing Finance Agency Announces Delay in Implementing Adverse Market Refinance Fee

The Federal Housing Finance Agency (FHFA) abruptly changed courses on Tuesday (8/25), announcing that they were postponing the beginning of their adverse market refinance fee, an added 50 basis point fee to all refinances, set to begin on September 1st to December 1st.  In announcing the delay, the FHFA also used the information release to provide a breakdown of the need to implement the fee, saying that pandemic-related losses could total at least $6 billion for the GSEs. However, the many in the industry felt the fee would harm the industry. FHFA has also announced that the enterprises will exempt refinance loans with loan balances below $125,000, nearly half of which are comprised of lower-income borrowers at or below 80% of area median income. Affordable refinance products Home Ready and Home Possible, are also exempt.