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Fannie and Freddie Mac will impose new fee on mortgage refinances

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Fannie Mae and Freddie Mac are planning to charge an additional fee on most mortgage refinance loans that could raise costs for borrowers trying to take advantage of historically low rates in an uncertain economy.

The mortgage giants, which have been under government control since 2008, announced the plan late Wednesday, saying the new 0.5 percent fee is meant to mitigate their risk in light of the COVID-19 pandemic. It would apply to most refinances involving the companies.

The companies and their regulator, the Federal Housing Finance Agency, have tread carefully during the pandemic, as some parts of the mortgage market temporarily seized up in March before slowly recovering. Mark Calabria, FHFA director, has been pushing to end US control of the companies, a task that has been impeded by the pandemic and ensuing economic downturn.


Fannie and Freddie don’t make loans. They buy them from lenders, wrap them into securities, and guarantee the repayment of principal and interest to investors. The companies said the new fee would apply to loans they purchase beginning next month, which could mean borrowers see the new costs almost immediately. Lenders could absorb some of the costs themselves rather than pass them on to consumers.

An FHFA spokeswoman said Fannie and Freddie requested the changes based on their projected pandemic-related losses.

The Mortgage Bankers Association, a trade group for lenders, said the fee would raise costs for the typical borrower by $1,400. Bob Broeksmit, MBA president, said in a statement that the announcement “flies in the face of the administration’s recent executive actions urging federal agencies to take all measures within their authorities to support struggling homeowners.”

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