Today, the California MBA released the following statement regarding the FHFA’s announced new 0.5% fee on GSE refinances:
Last week the Federal Housing Finance Agency (FHFA) launched an attack on consumers, homeowners, lenders, and the entire housing and mortgage markets. The announced imposition of a new 0.5% fee on all GSE refinance transactions is an unwarranted, opportunistic, ill-timed, and potentially devastating blow to one of the few economic sectors that has helped support the U.S. economy during the unprecedented health and fiscal crisis we currently face. Adding an average of $1,400 (based on $280,000 loan) to each refinanced loan will certainly boost the coffers of Fannie Mae and Freddie Mac, but hurts homeowners and lenders with no clear indication that the fee will offset any purported risk to GSE portfolios. In fact, that the fee only targets refinance activity (which, thanks to lower rates and the fact that homeowners must be current on their loans to refinance will serve to make the loans more safe) clearly demonstrate that FHFA’s priorities are misplaced and that the fee should be withdrawn immediately.
In California, the situation is compounded with proposals currently moving through our State Legislature. AB 1436 (Chiu) includes many of the same provisions of AB 2501 (Limon), which was soundly defeated in June. Those include extensive forbearance provisions and punitive penalties for missing any provisions of the bill’s implementation, if passed.
“If the California housing market adds the effects of a bill such as this, it will likely lead to significant limits on the access to affordable mortgage credit for California borrowers by disrupting the securitization market that provides needed liquidity for the mortgage market and otherwise discouraging new mortgage lending in the state. Our state already has the most acute housing affordability challenges in the nation, and this bill will exacerbate, not help, that problem,” said Bill Lowman, President and CEO of American Pacific Mortgage and Chairman of the Board of Directors for the California Mortgage Bankers Association.
The California MBA stands with the countless business and consumer groups that have also spoken out against this irresponsible action, and we urge FHFA Director Calabria to immediately reverse this erroneous decision and protect access to affordable credit for all consumers. Working to recapitalize the GSEs and remove them from conservatorship is a laudable goal, but it must not come at the expense of the American people during a once-in-a-century health and economic disaster.