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Implementation of Adverse Market Refinance Fee Delayed – The Impact on the Refi Market

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Doug Duncan, the chief economist at Fannie Mae, says be ready to refinance because mortgage rates are going even lower. And top of that the implementation date for the ‘adverse market refinance’ fee has further extended which may give rise to refi volumes.

The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac (the Enterprises) to delay the implementation date of their Adverse Market Refinance Fee until December 1, 2020. The fee was previously scheduled to take effect on September 1, 2020.

FHFA is also announcing that the Enterprises will exempt refinance loans with loan balances below $125,000, nearly half of which is comprised of lower-income borrowers at or below 80% of area median income. The fee is necessary to cover projected COVID-19 losses of at least $6 billion at the Enterprises.

Extending the effective date will permit lenders to close refinance loans that are in their pipelines and honor the rate lock commitments and be prepared for the next refi wave.

Several borrowers who were planning for refinance, now in hush-hush to apply for it. The fee takes effect for loans delivered to Fannie Mae or Freddie Mac on or after December 1st. However, loans must have closed anywhere from 15-30 days prior to that deadline in order for the banks to take the loans through the post-closing procedures required to deliver the loans to Fannie Mae and Freddie Mac.

Lenders need to show agility and need to be prepared to capitalize on the housing trend and take on these high loan volumes. A boom in refinance means lenders will have to close the loop on refinance loans faster. In the process, an important aspect for mortgage lenders is to maintain accuracy in processing and also keep the turn-around time low at all times.
At PrivoCorp, we help lenders accelerate the refinance process along with quickening the existing loan termination process.

PrivoCorp is one such mortgage processing provider that can help lenders save considerable time and costs, improve resource utilization, and refinance experience for borrowers. Reach out to us on

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