Senate Banking Committee Chairman Mike Crapo (R-Id.) wants to know why the Federal Housing Finance Agency—amid a financial crisis– is imposing new fees on homeowners who are refinancing their mortgages.
“Many housing market stakeholders have highlighted the potential negative impact the announced pricing increase will have on consumers seeking to access this benefit by increasing the average cost of refinancing,” Crapo wrote in a letter late last week to FHFA Director Mark Calabria.
As pressure builds on the FHFA to reverse its 0.5% fee, the president of the Cooperative Credit Union Association pointed out that the two Government Sponsored Enterprises affected—Fannie Mae and Freddie Mac—posted large profits in the second quarter of the year.
Last week the FHFA imposed the fee, saying that “in light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae,” the new fee will be imposed on all mortgages being refinanced starting in September. The fee is estimated to increase the cost of refinancing a mortgage by an average of $1,400.
In his letter, Crapo notes that stakeholders have said that the relatively short period before the effective date also could complicate the origination process for refinancing applicants. Crapo posed a series of questions about how and why the FHFA decided to impose the fee.
The national credit union trade groups have voiced their opposition to the new fees and Ronald McLean, president/CEO of the Cooperative Credit Union Association was blunt in his criticism.
“In essence, this new fee is ill-advised and ill-timed. It is anti-consumer and will harm the home refinancing market at the very time its health and stability are most needed,” McLean, whose association represents credit unions in Delaware, Massachusetts, Rhode Island and New Hampshire, wrote in a letter to Calabria on Monday.
He continued, “Applying the fee to pending loans that have locked rates and are scheduled to close after the effective date of the new fee is unacceptable and results in a credit union having two choices: either passing this new cost onto the borrower at a late stage in the loan process, or the credit union being forced to absorb the fee entirely, both of which are unacceptable.”
He said that Fannie Mae reported profits of $2.5 billion in the second quarter of the year, while Freddie Mac reported profits of $1.9 billion.
“The Association unanimously opposes efforts by the [Government Sponsored Enterprises] to impose fees simply to boost their bottom lines,” he wrote.