According to a report by the Wall Street Journal on Saturday, the Federal Housing Agency has communicated with groups of mortgage sectors about delays in the implementation of a fee that would add a 0.5% increase to mortgages repaid to Fannie Mae en Freddie Mac with effect from 1 Sept.
According to the article, the FHFA is considering a delay in the implementation date for market fee implementation, but does not intend to reverse it. The FHFA has been widely criticized for both the reasoning given for the fee and the short three-week notice to lenders and homeowners already in the middle of a refinancing process.
Dave Stevens, former president and CEO of the Association of Mortgage Bankers and former commissioner of the Federal Housing Administration, told HousingWire on Saturday that, “If it’s true, it seems clear that Director Calabria is listening to companies worrying about the consequences of this short time frame to implement. And while the logic of compensation remains in question, this is a good thing. sign and hopefully it will lead to a change in behavior going forward where conversations with impact assessment can take place prior to important policy announcements. “
Following the FHFA’s announcement of the fee on August 12, the mortgage industry organized a major campaign to get the FHFA and GSEs to reconsider the fee, with national and state lenders associations mobilizing members to reach out to FHFA and congress leaders.
On August 20, the heads of Fannie and Freddie addressed concerns about the sector, but the response did nothing to stop opposition to the movement and this week Capitol Hill came to the fore.
On Wednesday, a group of leading senators including Sherrod Brown, (D-OH) and Elizabeth Warren (D-MA) sent a letter to FHFA Director Mark Calabria with questions about the decision to add the fee on such a short notice and to request specific feedback on the reasoning of the FHFA behind the action.
The group of senators specifically asked FHFA to describe the market conditions they were trying to address with this fee, and how “a direct fee to homeowners was determined to be the most appropriate way to address those conditions.”
The senators also asked why the FHFA and the GSEs “believe that individual homeowners are better able to bear part of the cost of this economic downturn than businesses.”
On Friday, 41 bilingual members of Congress signed a letter to Calabria describing their objections to the compensation.
“In announcing this new ‘Adverse Market Refinance Fee,’ Fannie Mae and Freddie Mac (often referred to as government-sponsored companies, like the GSEs) cite market and economic uncertainty, along with higher risks and costs,” the letter states. However, when this policy was announced, no further explanation was given to justify the extra cost to homeowners.
“Conversely, homeowners saving hundreds of dollars a month on their mortgages reduce their debt to income ratio, which reduces the risk for investors. Furthermore, lenders report respect for employment within 24 hours of closing, which further reduces credit risk, ”the letter continues.
Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) have taken important steps in this pandemic to protect homeowners and our economy. Therefore, we were surprised by this announcement that refinancing a mortgage will be more difficult and expensive for even the most creditworthy homeowners.
‘The best thing we can do for the fiscal position of the United States is to restore the economy as quickly and robustly as possible. To that end, we ask that FHFA and the GSEs reconsider this fee, as our country is returning from COVID-19. ”
The White House waited in, shortly after the announcement of the fee, and said it had “serious concerns.”
