The Federal Housing Financing Agency (FHFA) announced on July 16, 2021 that effective August 1, 2021 it is eliminating the 50 basis point Adverse Market Refinance Fee for refinance mortgage loans.  The FHFA notes that the fee imposed on lenders originally was designed to cover losses projected as a result of the COVID-19 pandemic.  However, the FHFA states that “[t]he success of FHFA and [Fannie Mae and Freddie Mac] COVID-19 policies reduced the impact of the pandemic and were effective enough to warrant an early conclusion of the Adverse Market Refinance Fee.”  The FHFA expects that lenders who passed on the cost of the fee to borrowers will now eliminate any borrower charges based on the fee.

The FHFA also advises that the “vast majority” of Fannie Mae and Freddie Mac borrowers have successfully exited COVID-19 forbearance, and that in April 2021 approximately two percent of single-family mortgages guaranteed by Fannie Mae and Freddie Mac remained in forbearance, which is down from a high of approximately five percent in May 2020.