Fannie and Freddie Cut Mortgage Refinancing Fees, Lowering Costs For Borrowers


The Federal Housing Finance Agency said Friday that Fannie Mae and Freddie Mac are lowering mortgage refinancing fees imposed during the pandemic, reducing costs for borrowers.

Fannie and Freddie charged lenders a 50 basis point commission on all loans to the two mortgage giants. The fees intended to cover the losses projected by the pandemic were passed on to the borrowers.

“The COVID-19 pandemic has financially exacerbated America’s affordable housing crisis. Removing refinancing fees in an unfavorable market will help families take advantage of low rates to save more money, ”said Sandra Thompson, acting director of the Federal Housing Finance Agency. Her agency is conservative Fannie and Freddie.

“Today’s actions advance FHFA’s priority to support affordable housing while protecting the safety and reliability of businesses.”

The mortgage industry welcomed the move.

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

The fee was introduced just after the federal government introduced a massive mortgage bailout program at the start of the pandemic. During the worst period of the economic downturn, approximately 5% of Fannie and Freddie’s borrowers participated in mortgage waiver programs. According to Black Knight, this share fell to 2.1% as of July 13.

A total of 1.86 million borrowers remain in Covid abstinence plans, accounting for 3.5% of all active mortgages. For FHA / VA this share is 6.2%, and for portfolio loans of private brands and banks – 4.0%.

Mortgage rates have recently dropped and are now near a five-month low. Appendices to refinancing jumped over the past two weeks, according to the Mortgage Bankers Association, and is likely to grow even higher with these additional savings.

“We have encouraged FHFA to end this policy and are grateful that they reviewed the data and responded to our request,” said Bob Braxmith, president and CEO of the association. “With less than 2 percent deferral of GSE loans and continued increases in home prices resulting in significant borrower equity, there is no need for fees.”

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