In August, I blogged about Fannie Mae Slamming Refi Borrowers With A New 1/2 Point Fee.
And then later in August, I blogged about Fannie Mae Yanking Its 1/2 Point Fee In Response to Industry Pressure.
But, Fannie only postponed its refi fee until December 1st. So all refinance loans sold to Fannie Mae and/or investors after December 1st will be subject to the 1/2 point fee.
WHY BRING THIS UP NOW AND NOT ON DEC 1st?
I am bringing this up now instead of on December 1st b/c the extra fee started to show up in most lenders’ pricing (rates) last week.
Hence, all conforming refi rates are now about 1/4% higher than where they were a few weeks ago solely and only b/c of the new 1/2 point refi fee.
The fee is showing up in pricing now b/c it takes 30 to 45 days to close a refinance.
So by the time a refi that gets locked today (or last week) closes, that loan will be subject to the extra fee when a lender tries to sell it on the secondary market.
If today’s pricing did not reflect the fee, the lender would have to eat the extra fee. And that is something few lenders can afford to do in good times or bad.
WILL THE FEE REMAIN?
Rob Chrisman (mortgage blogger) mentioned today that refis are expected to drop off over 50% next year.
And given that Fannie Mae may now be addicted to its current volume levels, its extra fee will certainly not help its effort to maintain them.
Hence, they may likely bow to industry pressures and a desire to re-invigorate refi volume all over again.
On the other hand, Fannie Mae may also get addicted to the extra revenues that the fee generates.
The fee is ostensibly supposed to cover the extra “risk” associated with every refi in today’s economy, but I suspect some of those extra fees might end up in someone’s pocket.
And nothing is more addicting than fat pockets. 😊
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