Mortgage Rates Drop as Fannie Mae and Freddie Mac Loans End Adverse Market Refinance Fee

couple admiring their new house with mortgage rates dropping
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The Federal Housing Finance Agency announced last week that Fannie Mae and Freddie Mac will be eliminating the Adverse Market Refinance Fee for loan deliveries effective August 1, 2021. This decision was made to help families reduce their housing costs so they can save more money, according to the agency.

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Lenders will no longer be required to pay the Enterprises a 50-basis point fee when refinanced mortgages are delivered. This fee was to cover projected losses as a result of the pandemic. These policies helped reduce the impact of the pandemic, according to the FHFA, and were effective enough to withdraw the fee. The FHFA had hoped that lenders who were charging borrowers the Adverse Market Refinance Fee would pass the costs savings back to borrowers.

“The COVID-19 pandemic financially exacerbated America’s affordable housing crisis. Eliminating the Adverse Market Refinance Fee will help families take advantage of the low-rate environment to save more money,” said Acting Director Sandra L. Thompson in a statement. “Today’s action furthers FHFA’s priority of supporting affordable housing while simultaneously protecting the safety and soundness of the Enterprises.”

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This move has been praised by the mortgage industry.

“Santa Claus has come early for homeowners looking to refinance their mortgages,” said Greg McBride, chief financial analyst for, reports CNBC. “The fee had often resulted in an increase of one-eighth percentage point in rate, which was enough to siphon $20 per month in potential savings out of the pockets of borrowers with a $300,000 loan.”

According to the FHFA, a majority of Enterprise borrowers have exited COVID-19 forbearance. In April, 2% of single-family mortgages guaranteed by Fannie Mae and Freddie Mac remained in forbearance, down from 5% in May 2020.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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