Will lenders refund fees paid for a market downturn that never happened? – Orange County Register


Chino Hills resident Rick Serpa paid an extra $ 2,000 refinancing his mortgage last April to cover the cost of the market downturn caused by the pandemic. But the recession never happened.

Serpa is now wondering how to apply for a refund.

“I am generally one of those who ignore the idiocy of the world in which we have been living for the last couple of years. I am making an exception for this, ”Serpa wrote in an email. “Since the disaster never came, the money raised by the program was not spent by Fannie or Freddie.”

Sickle can catch something.

The federal government’s mortgage regulator, the Federal Housing Finance Agency, ordered lenders to start charging an additional half a percent commission in December on all loans sold to Fannie Mae and Freddie Mac. The half point commission is $ 2,500 for a $ 500,000 loan.

It was designed to cover losses projected from the COVID-19 pandemic – losses that have not yet occurred, according to FHFA.

Indeed, the short-lived downturn in the housing market in the spring of 2020 turned into a raging housing boom as buyers rushed to take advantage of record low mortgage rates and others sought larger homes while working remotely.

According to the Mortgage Bankers Association, only 1.8% of Fannie and Freddie mortgages are on hold today, up from about 6% in May 2020.

Mortgage delinquency rates have reached their lowest level since the start of the pandemic and are now below the pre-Great Recession average, according to Black Knight. The share of mortgage loans in active foreclosure fell to another record low in June – 0.027%.

However, Fannie and Freddie managed to raise about $ 5.9 billion from borrowers such as Serpa, who paid half a point in “refinancing commissions for unfavorable market conditions,” said Guy Sekala, publisher and CEO of Inside Mortgage Finance.

On July 16, FHFA announced that it would be removing the fee at the end of the month. The announcement cites Acting Director Sandra L. Thompson happily stating that the action “will help families take advantage of low-rate conditions to save money.”

But in the FHFA announcement, it was unclear if there would be any refund.

The FHFA expects lenders who charged the commission to return the savings to borrowers, the report said.

What are the lenders? This sounds like the language of distancing. And “waiting” seems like code, and you better do it.

Does Acting Director Thompson mean lenders need to make sure their clients repay any mortgages granted by F&F after July 31 by lending or repaying half a point?

Or is it instructing lenders to reimburse borrowers from the outset of the great tax-robbery in the refinancing market? If so, will Fannie and Freddie lend lenders half a point for each refinancing so lenders can then lend to their borrowers? Or will Fannie and Freddie keep half the point but require lenders to keep their clients healthy?

FHFA did not respond to my inquiries to clarify the posting time.

Nothing FHFA is doing to address this refund issue will surprise me. The FHFA (F&F regulator and conservative) – and Fannie and Freddie, for that matter – have a long history of arbitrariness and capriciousness.

Following the announcement last week, many lenders have withdrawn fees for refinancing transactions for which no loan documents have yet been issued.

Of course, ask your mortgage lender if your mortgage is directed or has already been bought by Fannie and Freddie by them. If so, ask about canceling this unfavorable market commission if your refinancing loan is not funded yet.

If it was funded, contact your mortgage agent for possible reimbursement. You can point to a key offer in FHFA’s July 16 press release, which says FHFA expects lenders who charged borrowers to return the savings.

If you haven’t refinanced yet or are looking for a lower rate, rates have been trending downward lately. On top of that, you can expect an eighth cut in your mortgage rate or a half point cut in spending.

Not bad.

Freddie Mac appreciated the news: The 30-year fixed rate averaged 2.78%, down 10 basis points from last week. The 15-year fixed rate averaged 2.12%, 10 basis points below the all-time low.

The Mortgage Bankers Association reported a 4% decrease in mortgage applications from the previous week.

Bottom line: Assuming that the borrower receives an average 30-year flat rate on the corresponding loan of $ 548,250, last year’s payment was $ 67 more than this week’s payment of $ 2,247.

What do I see: Locally, highly qualified borrowers can obtain the following fixed rate mortgages per point: 30-year FHA at 2.25%, 15-year standard at 1.875%, 30-year standard at 2.5%, 15-year regular a high balance ($ 548,251 to $ 822,375) at 1.99%, a 30-year regular high balance at 2.69%, and a 30-year fixed large balance of 2.875%.

Eye-catching Credit of the Week: Fixed mortgage for 30 years at 2.875% without closing costs.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or jlazerson@mortgagegrader.com. His site www.mortgagegrader.com

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