In August, the Federal Housing Finance Administration (FHFA) announced an Adverse Market Refinance Fee of 0.50% applicable to refinance mortgages purchased by Freddie Mac and Fannie Mae (the Enterprises). The intent of the fee is to help buffer the Enterprises’ finance from adverse market conditions and to increase their capital positions as the FHFA prepares to release them from conservatorship.
The way this fee may affect the mortgage market and borrowers is not straightforward. In this article, Milliman’s Nicholas Beihoff, Ryan Lindsay, and Jonathan Glowacki provide clarity on the fee and its potential impact. They demonstrate how the fee will likely have a limited impact on borrowers looking to refinance their mortgages into a lower interest rate.