Under intense pressure from members of Congress and financial trade groups, the Federal Housing Finance Agency announced Tuesday that it will delay a new fee on the refinancing of Fannie Mae and Freddie Mac mortgages until Dec. 1.
The new fee had been scheduled to take effect on Sept. 1.
The housing agency also announced that Fannie Mae and Freddie Mac will exempt refinance loans with balances below $125,000, nearly half of which are owed by low-income borrowers.
The agency continued to defend the fee, saying that because of the coronavirus economic crisis, the Government Sponsored Enterprises face losses of at least $6 billion.
“Specifically, the actions taken by the Enterprises during the pandemic to protect renters and borrowers are conservatively projected to cost the Enterprises at least $6 billion and could be higher depending on the path of the economic recovery,” the agency said. That total includes at least $4 billion the agency will lose because of forbearance defaults.
“FHFA has a statutory responsibility to ensure safety and soundness at the Enterprises through prudential regulation,” agency officials said. “The Enterprises’ Congressional Charters require expenses to be recovered via income, allowing the Enterprises to continue helping those most in need during the pandemic.”
Members of Congress from both sides of the Capitol and from both parties had condemned the FHFA for instituting the new fee at the same time homeowners are being heavily hit by economic problems caused by the pandemic.
Financial trade groups also placed pressure on policymakers. Earlier Tuesday, CUNA President/CEO Jim Nussle and the presidents of the state credit union leagues sent a letter to FHFA Director Mark Calabria voicing their opposition to the fee.
Following the FHFA announcement, NAFCU/CEO President B. Dan Berger said that he is pleased with the delay but said it will hurt homeowners when it goes into effect.
“While this delay will temporarily limit unnecessary financial strains placed on credit unions and their members, the policy, once implemented, will still force credit unions to absorb new financial costs amid a recession and global pandemic,” he said. “We understand the GSEs are facing financial concerns of their own, but these concerns would be better mitigated through wholesale housing finance reform as opposed to preventing credit unions from helping more members.”
Nussle applauded the FHFA decision. “Delaying the implementation of the fee until December will protect locked-in loans in credit union pipelines from this fee and exempting loans under $125,000 will help protect low and moderate income borrowers looking to refinance their mortgages from bearing added costs at this challenging time,” he said.