In the process of refinancing your mortgage or planning on doing it soon? You may end up paying more than expected – About $1,400 extra, on average, estimated by the Mortgage Bankers Association (a trade group who represents lenders).
“As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee in Price,” Freddie Mac explained in a notice to lenders this week.
This 0.5% “adverse market fee” will apply to all refinances and goes into effect for all loans not closed by Sept 1. In June, it took 48 days on average for the closing of a refinance loan, so there will be many loans already in process who will be affected by this new fee.
This announcement is facing sharp criticism and many trade organizations and public interest groups are calling on the The Federal Housing Finance Agency (which regulates Fannie and Freddie) to reverse the fee. The government has expressed concerns and has advised they will be looking into it. What ultimately happens, remains to be seen.
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