New mortgage-refinance fee is delayed for three months


Fannie Mae’s and Freddie Mac’s regulator is delaying for three months a controversial new fee on most mortgage refinances that could raise costs for borrowers.

The 0.5% charge will take effect Dec. 1, not Sept. 1 as initially planned, the Federal Housing Finance Agency said in a Tuesday statement. The agency also said loans with balances of less than $125,000 will be exempt from the fee, meaning it won’t affect many people with lower incomes.

Lawmakers and industry groups have criticized the fee, arguing that it’s inappropriate to make refinancing loans more expensive during the COVID-19 pandemic. The added charge could also hurt people who are eager to take advantage of historically low borrowing rates.


In its statement, the Federal Housing Finance Agency defended the fee, saying it’s necessary to cover pandemic-related losses for Fannie and Freddie that are projected to reach at least $6 billion. The companies, which have been under the government’s control since the 2008 financial crisis, have pursued several costly actions during the economic slowdown to keep renters and homeowners in their residences, the agency said.

Fannie and Freddie don’t make loans. They buy them from lenders, wrap them into securities and guarantee the repayment of principal and interest to investors. Such lenders could decide to absorb some of the costs themselves rather than pass them on to consumers.

The Mortgage Bankers Assn., a trade group for lenders, has estimated that the fee would raise costs for the typical borrower by $1,400. Association President Bob Broeksmit said in an Aug. 12 statement that adopting the new fee “flies in the face of the administration’s recent executive actions urging federal agencies to take all measures within their authorities to support struggling homeowners.”