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CUNA joined a broad coalition of organizations to oppose a proposal which would allow Fannie Mae and Freddie Mac (the GSEs) to increase the fee for certain purchased refinanced mortgages. In addition to signing the below group statement, Jim Nussle, CUNA President/CEO, wrote to Federal Housing Finance Agency Director Mark Calabria about his concerns stating, “Not only will this decision raise costs for credit union members and other borrowers, it may ultimately price some of our most vulnerable potential homeowners out of the market.”
Statement on GSEs’ New Adverse Market Fee
“Wednesday night’s surprise announcement by Fannie Mae and Freddie Mac (the GSEs) conflicts with the Administration’s recent executive actions urging federal agencies to take all measures within their authority to support struggling homeowners. The additional 0.5% fee on Fannie Mae and Freddie Mac refinance mortgages will raise costs for families trying to make ends meet in these challenging times. In addition, the September 1 effective date means that thousands of borrowers who did not lock in their rates could face unanticipated cost increases just days from closing.
In spite of the fragility of the national economic recovery, the mortgage market has been able to withstand many of the most severe effects of the COVID-19 pandemic. The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the GSEs and taxpayers. At a time when the Federal Reserve is purchasing $40 billion in agency mortgage-backed securities per month to help reduce the cost of buying or refinancing a home and stimulate the broader economy, this action by the GSEs raises those costs, contradicting and undermining Fed policy.
The pricing increase is particularly harmful for our nation’s low- and moderate-income homeowners and for the emerging, but unsteady improvements to the national economy. The undersigned organizations strongly urge the Federal Housing Finance Agency, which had to approve this policy, to withdraw this ill-timed, misguided directive.”
The refinance fee proposal goes into effect September 1, 2020. The League and CUNA will continue monitoring this issue closely and provide credit unions updates as new information is made available.