FHFA Kills Refi Fee Imposed by Trump Administration
The Federal Housing Finance Agency on Friday reversed a fee imposed on all refinanced loans last year by the since-fired director who led the watchdog agency under former President Donald Trump.
Former FHFA Director Mark Calabria announced the so-called adverse market fee, adding an average $1,400 to the cost of refinancings, three months before last year’s presidential election. The fee was intended to recapitalize Fannie Mae and Freddie Mac as part of their pathway to being reprivatized.
When Calabria announced the new fee, President Joe Biden was leading in the polls and opposed Republican plans for the two mortgage giants. At the end of August, after the mortgage industry pushed back on the new fee, saying they hadn’t been given enough notice to price the cost into refi deals, Calabria agreed to delay implementation of the fee until Dec. 1 – which ended up being a month after the election that put Biden in charge of the fates of Fannie Mae and Freddie Mac, which have been in government conservatorship since 2008.
The FHFA killed the fee “to help families reduce their housing costs,” the agency said in a statement announcing the decision.
About $1.6 trillion of U.S. mortgages were refinanced in 2021’s first and second quarters, a period when consumers were paying the fee that was intended to recapitalize Fannie Mae and Freddie Mac for a re-privatization that, under the Biden administration, is unlikely to happen.
"The COVID-19 pandemic financially exacerbated America's affordable housing crisis,” said FHFA Acting Director Sandra L. Thompson, appointed by Biden three weeks ago to lead the agency after Calabria was fired. “Eliminating the adverse market refinance fee will help families take advantage of the low-rate environment to save more money,"
Canceling the refi fee “furthers FHFA's priority of supporting affordable housing while simultaneously protecting the safety and soundness of the Enterprises,” she said.
Calabria was fired on June 24, the same day the U.S. Supreme Court handed down a decision giving the president the ability to name his own head of the watchdog for Fannie Mae and Freddie Mac, the largest companies in the nation that package mortgages into securities to sell to investors.