The Federal Housing Finance Agency's proposal could undermine the companies’ mission to support the housing market and penalize consumers in underserved communities, industry and consumer groups say.
The mortgage giants were criticized earlier this month for a plan to charge an "adverse market fee" to protect against losses resulting from the pandemic.
If Trump is reelected, his administration would likely move forward with privatizing Fannie Mae and Freddie Mac and relaxing key rules, while a Joe Biden presidency would likely try to expand homeownership access and borrower protections.
Lenders initally won't be able to pass on the cost of the Federal Housing Finance Agency's "adverse market fee" to borrowers whose rates on GSE-backed mortgages and refinances are already locked in.
The higher charge on mortgages refinanced through Fannie Mae and Freddie Mac is supposed to cushion against a crisis but could contribute to one as the fees are passed on to struggling consumers.
The new “adverse market fee” for refinanced mortgages resembles steps the companies took to combat the 2008 mortgage crisis. But critics charge it isn’t necessary and will hurt borrowers’ ability to tap into low rates.
The agency said property owners can enter into new or modified forbearance plans if they have a hardship due to the coronavirus, but the landlords must agree not to kick out renters solely for nonpayment of rent.
The mortgage giants will have to meet benchmarks for covering cash flow needs during stressed periods. The FHFA views the requirements as a prerequisite to the companies exiting conservatorship.
