FAM to stop charging Adverse Market Refinance Fee immediately following FHFA announcement

Earlier today, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will no longer require lenders to pay the Adverse Market Refinance Fee of 50 basis points for loans, effective Aug. 1.

At Finance of America Mortgage (FAM), we applaud this decision and will stop charging the fee to refinance borrowers on all new loan locks, effective today, July 16, 2021. We’ve adjusted our pricing to reflect the removal of the associated Loan-Level Price Adjustment (LLPA).

What to expect: All new loan locks on or after July 16, 2021 will NOT include the LLPA in the price. Any locked loans currently in the pipeline and in a status of “Ready for Docs” and earlier that include the LLPA will be manually adjusted by FAM and completed by Monday, July 19, 2021. FAM is prioritizing the removal of the LLPA on loans in reverse order, starting with Ready for Docs, Clear to Close, Conditionally Approved, etc.

Loans that have the Adverse Market Fee removed will have an updated Loan Estimate or Closing Disclosure reflecting the updated credit/discount on the next issued disclosure. However, for all loans that are currently in Docs Out Status and beyond, the current pricing will remain in effect.

About the fee: Fannie and Freddie implemented the Adverse Market Fee back in December in an effort to offset risk and cover projected financial losses due to the COVID-19 pandemic. However, the enterprises determined the fee is no longer needed, thanks to the success of pandemic-related financial policies and the fact that most Fannie and Freddie borrowers have exited loan forbearance plans, according to the FHFA.

With this requirement no longer in place, you can pass along the cost savings back to your refinance borrowers at a time when mortgage affordability is more critical than ever. If you have any questions, please reach out to your FAM TPO Account Executive.