This guide is an update of a previous article: This guide covers FHFA postpones adverse fee for mortgage refinance loans. FHFA Postpones Adverse Fee until later this year sends mortgage rates lower: Mortgage rates are at historic highs. The housing and mortgage market is in crisis like never in history with high inflation, record high rates, and surging home prices. There is not a mortgage company in the nation that is not hurting with uncontrollable high rates, skyrocketing home prices, and inflation out of control.
The housing market is in chaos now than it was prior to the coronavirus outbreak. The demand for homes is still high but many homebuyers are priced out of the housing market.
The inventory of homes for sale is steadily increasing due to homebuyers not being able to afford homes and being priced out of the housing market. With over 10 million Americans filing unemployment since the coronavirus pandemic hit the nation and an unemployment rate north of 6%, the housing and mortgage markets have been at a standstill and has been plummeting in many areas. Many lenders have mortgage rates north of 7.0%. Mortgage rates have been increasing every month since the coronavirus pandemic hit the nation due to the Feds not dropping rates and skyrocketing yields on 10 year treasuries. Mortgage rates today are in the 7.5%% percent range.
Flood of Mortgage Loan Application Causes Longer Turnaround Times In The Mortgage Process
Gustan Cho Associates is a five-star national mortgage company licensed in multiple states with no lender overlays on government and FHA loans. The team at Gustan Cho Associates has never been busy as it is now. All of our support staff and licensed mortgage loan originators are working 12 plus hour days as well as weekends and holidays due to the massive volume in loan applications. We are proud to say that we have not added additional lender overlays during the coronavirus pandemic. Gustan Cho Associates Mortgage Group is blessed that we are still taking on new mortgage loan applications despite historic high record volume. Gustan Cho Associates Mortgage Group is one of the very few mortgage lenders that will originate and fund FHA and VA loans with under 620 credit scores.
FHFA Postpones Adverse Fee Will No Doubt Cause Increase In Refinance Mortgage Loan Applications
Due to the monthly drop in mortgage rates, many borrowers have refinanced their home mortgages multiple times. Some have refinanced their home loans every other month to take advantage of the historic low mortgage rates. Refinancing before the recapture period is over causes lenders to give back the commission they earned back to the investors. What this means is normally if a homeowner refinances their home loans within six months, the mortgage company needs to give the commission and yield spread they earned from the wholesale lenders/investor. This includes the loan officer. The commission earned by the loan officer needs to be paid back to the wholesale lender/investor.
The Federal Housing Finance Agency (FHFA) came up with a new rule charging an adverse fee 50 basis point loan level pricing adjustment (LLPA) on refinances.
This includes rate and term refinance as well as cash-out refinance mortgages. However, at the last minute, the FHFA Postpones Adverse Fee until at least December 1st, 2020. This is great news for borrowers and lenders where mortgage rates will still remain low. Due to this breaking news of the FHFA Postpones Adverse Fee until a later date, the refinance loan volume will no doubt skyrocket. Homeowners will try to refinance their home mortgage prior to the refinance adverse fee becomes effective. In this breaking news article, we will discuss and cover on the FHFA Postpones Adverse Fee For Mortgage Refinance Borrowers.
Adverse Fee on Refinance Transactions Only and Not Purchase Home Loans
The adverse fee proposed by the FHFA only applies to refinance mortgage transactions only. It is not for home purchase loans. The adverse fee on refinancing mortgages was supposed to take effect on September 1st, 2020. However, on Tuesday, August 26th, 2020, the FHFA unexpectantly announced the adverse fee on refinance transactions will be delayed until December 1st, 2020.
The Federal Housing Finance Agency instructed both Fannie Mae and Freddie Mac to postpone the adverse fee effective date from September 1st, 2020 to December 1st, 2020.
The Federal Housing Finance Agency will exempt loan balances of less than $125,000 from this adverse refinance fee. This affects lower-income homeowners at or below 80% of the area median income. Home Ready and Home Possible conventional loans, which are geared towards lower-income borrowers, are also exempt from the adverse refinance fee rule.
FHFA Postpones Adverse Fee Is Bad For Borrowers
The FHFA instituted the adverse refinance fee to help mortgage borrowers. This is not the case. Lobbyists such as the Mortgage Bankers Association are really against this adverse refinance fee and are criticizing the FHFA. The adverse refinance fee is just delayed temporarily. It is expected to go into effect on December 1st. What this means is mortgage borrowers will pay higher mortgage rates to absorb the 50 basis points adverse refinance fee. 50 basis points turn out to be 0.25% in mortgage rates. Gustan Cho Associates will keep our viewers updated on this developing story. In the meantime, the volume of refinance mortgage volume is expected to soar.
