Wednesday’s “surprise” announcement that Fannie Mae and Freddie Mac will impose a new 0.5% fee on Fannie Mae and Freddie Mac refinance mortgages will hurt homeowners struggling through the coronavirus economic crisis and will harm efforts to help the economy recover, a broad coalition of credit union, banking, housing and consumer groups said Thursday.
The Federal Housing Finance Agency said Wednesday 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.
“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,” the groups, including the Credit Union National Association, the National Association of Federally-Insured Credit Unions, the American Bankers Association and the Center for Responsible Lending said, in the statement.
They continued, “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.”
NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt said that credit unions cannot afford to absorb the cost of the fee in order to shield credit union members.
“This new fee puts credit unions in the difficult position of absorbing the cost or passing it onto their members as part of the cost of the refinance,” Hunt wrote, in letters to members of Congress and Trump Administration officials.
Various news organizations reported Friday that the White House also is unhappy with the FHFA decision.
In addition, Senate Banking Committee ranking Democrat Sherrod Brown of Ohio blasted the FHFA decision.
“FHFA and the [Government Sponsored Enterprises’] decision to raise costs on homeowners will hurt families across the country,” he said. “In the middle of the worst economic downturn since the Great Depression, the GSEs and their regulator should be fulfilling their mission to support homeowners and the housing market. Instead, they’re doing just the opposite.”