Fannie Mae and Freddie Mac have been slammed for planning an additional refinancing charge to cover COVID-related losses, but the head of the Federal Housing Finance Agency defended the policy in House testimony.
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 agency’s plan to extend the "qualified mortgage" stamp of approval to more loans could help lenders that rely on alternative data and cushion the blow of other QM changes for Fannie Mae and Freddie Mac.
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Refinancing has been one of the bright spots in a difficult year for lending, and the industry has concerns that a fee to be imposed by Fannie Mae and Freddie Mac could slow down the business.
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.
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 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.
