Tester Demands Housing Agency Reverse Decision to Charge Fee for Refinanced Home Loans
Senator: “In the midst of a global health pandemic with a vaccine not yet in sight, there is no rational explanation for this course of action”
Following a recent announcement that Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac are establishing a fee on refinanced home loans, U.S. Senator Jon Tester led a bipartisan group of colleagues in demanding that Federal Housing Finance Agency (FHFA) Director Mark Calabria prevent the fee, which would needlessly hurt Montanans in the midst of a global public health and economic crisis.
Tester and his colleagues are calling for a reversal of the FHFA’s decision to allow the fee, noting that increasing burdens on borrowers during the coronavirus pandemic could be disastrous for American families. The GSEs announced last week that the 50 basis point fee on refinanced home loans (.5 percent of the mortgage loan) would be instituted on September 1st, and were given the green light by the FHFA without any notice to external stakeholders or consultation with Congress.
“We write in regard to the market refinance fee that was recently announced by the Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac,” wrote Tester and his colleagues in a bipartisan letter to FHFA Director Calabria. “That the Federal Housing Finance Agency (FHFA) would allow the GSEs to take this course of action, during what is universally agreed to be a period of great economic distress, is surprising and deeply troubling. We therefore request that you immediately act to require that the GSEs withdraw this fee to prevent further harm to everyday Americans and our economy.”
The Senators continued: “This type of fee is difficult enough to price in during the best of times; in the midst of a global health pandemic with a vaccine not yet in sight, there is no rational explanation for this course of action in the manner and speed that you have taken.”
As the COVID-19 pandemic continues to cause significant financial strain on American families, many Montanans who are able to do so have taken steps to make their homes more affordable through refinancing, and the GSEs have adopted policies to ease purchase and most refinance transactions. This unexpected new fee, however, would cost a borrower refinancing a $300,000 loan about $1,400—$200 more than the stimulus payment received by Americans earlier this year.
Tester also joined his Senate Banking Committee colleagues in demanding answers from Calabria as to why the fee was instated in the first place, and requesting he put an stop to it:
“We do not know the full effect that COVID-19 will have on our nation’s health or on families’ finances. If families can lower their monthly costs, including housing costs, it would help them weather the public health and economic crisis in the months ahead. An unexpected fee will not,” wrote Tester and his colleagues. “We request that you immediately provide answers to [our questions] and not proceed, or approve of proceeding, with any pricing or policy changes during this pandemic that are not intended to help homeowners, renters, and our housing system withstand this crisis.”
Tester has led the charge to ensure that Montana families are able to keep a roof over their heads throughout the coronavirus pandemic. He recently called on the Trump Administration to enforce bans on housing evictions through the remainder of the crisis, and he secured more than $3 million in housing relief to help Montanans hardest hit by the pandemic. He additionally secured $3 million in Department of Housing and Urban Development grant funding to increase affordable housing across Montana and fought to ensure the CARES Act included $5 billion in supplemental Community Development Block Grant (CDBG) funding to prevent, prepare for, and respond to coronavirus.
Read Tester’s bipartisan letter to FHFA HERE.
Read Tester’s letter with the Senate Banking Committee HERE.