McBride was among the policy’s critics. The fee, McBride said, frequently meant that borrowers’ rates were often one-eighth of a percentage point higher than they otherwise might be. In actual dollar terms, the effect is relatively small but not insignificant for some — around $20 per month for a $300,000 loan. “The justification for the fee when it was sprung on the market was that it was necessary to pay for the costs of forbearance and pandemic-related payment relief incurred by Fannie Mae and Freddie Mac,” he said. “But the homeowners punished were those that weren’t high risk, weren’t in need of forbearance or payment relief and were in fact reducing their risk to the mortgage finance marketplace by reducing their rates and monthly payments. It never passed the smell test to begin with.”
“FHFA’s expectation is that those lenders who were charging borrowers the fee will pass cost savings back to borrowers,” the agency said. The FHFA said the fee and other policies put in place for the pandemic “were effective enough to warrant an early conclusion” of this fee.
“Santa Claus has come early for homeowners looking to refinance their mortgages,” Bankrate chief financial analyst Greg McBride wrote in response to the move. “To allow families to save more money, lenders will no longer be required to pay a 50-basis point fee when they deliver refinanced mortgages,” FHFA said last week in a press release.
Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann. Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit —
Story continues McBride wrote that the savings from the fee’s elimination should go back into the pockets of people with mortgages. However, some lenders might not pass the savings on, which is why it’s important to shop around and examine different lenders, said McBride.
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