Rick Serpa of Chino Hills paid an additional $ 2,000 when refinancing his mortgage last April to cover the cost of a pandemic-induced market downturn. But the downturn never materialized.

Now Serpa is wondering how to claim his refund.

"I'm one in general who ignores the idiocy of the world we've been in for the past few years. I'm making an exception here, "Serpa wrote in an email. "Since the adversity never came, the money raised through the program was not spent by Fannie or Freddie."

Serpa could be into something.

The federal government's mortgage regulator, the Federal Housing Finance Agency, ordered lenders to charge an additional half a percentage point fee on all loans sold to Fannie Mae and Freddie Mac starting December. The half point fee is $ 2,500 for a $ 500,000 loan.

It was designed to cover losses predicted from the COVID-19 pandemic, FHFA said – losses that have yet to be encountered.

In fact, a brief home break-in in the spring of 2020 turned into a frenzied real estate boom as buyers rushed to take advantage of record-low mortgage rates and others looked for bigger homes while working remotely.

Today, according to the Mortgage Bankers Association, only 1.8% of Fannie and Freddie's mortgages are in indulgence, up from about 6% in May 2020.

The mortgage default rate was at its lowest level since the pandemic began and is now back below its pre-Great Recession average, according to Black Knight. The share of mortgages in active foreclosure fell to another record low of 0.027% in June.

However, Fannie and Freddie managed to collect an estimated $ 5.9 billion from borrowers like Serpa who paid the half-point "unwanted refinancing fee", said Guy Cecala, editor and CEO of Inside Mortgage Finance.

On July 16, the FHFA announced that the fee would be abolished at the end of the month. In the announcement, acting director Sandra L. Thompson cheerfully quoted that the campaign "will help families take advantage of the low interest rate environment to save more money."

But the FHFA's announcement was unclear whether a refund would come.

The FHFA expects lenders who collected the fee to return the cost savings to borrowers, the announcement said.

Which Lenders? That sounds like distant language. And "expectation" seems to be code to make you better do this.

Does Acting Director Thompson mean that lenders will have to make their clients complete for all mortgages delivered to F&F after July 31, by either crediting or coughing up the half-point refund?

Or is it instructing lenders to reimburse borrowers for adverse market fee rip-offs from the start of the big refinancing? If so, will Fannie and Freddie credit the lenders with half a point for each refinance so that the lenders can then credit their borrowers? Or will Fannie and Freddie keep the half point but require lenders to make their clients whole?

FHFA did not respond to my questions to clarify by the editorial deadline.

Nothing FHFA does to answer this refund question would surprise me. FHFA (F&Fs Regulator and Conservator) – and Fannie and Freddie – have a long history of caprice and arbitrariness.

Since the announcement last week, many lenders have removed the disadvantageous market fee on refinancing transactions for which loan documents have not yet been issued.

Be sure to ask your mortgage lender if your mortgage is in or has already been bought by Fannie and Freddie. Then ask about the elimination of these market disadvantages if your refinancing loan is not yet financed.

If it has been funded, contact your mortgage administrator for a possible refund. You can refer to the key phrase in the FHFA's July 16 press release that the FHFA expects lenders who have charged borrowers the fees to return the cost savings to them.

If you haven't refinanced or are looking for a lower interest rate, interest rates have been falling lately. In addition, you can expect an eighth drop in your mortgage rate or a half a point lower in your costs.

Not bad.

Freddie Mac rated news: The 30-year fixed rate averaged 2.78%, 10 basis points lower than last week. The 15-year fixed rate averaged 2.12%, down 10 basis points to an all-time low.

The Mortgage Bankers Association reported a 4% decrease in mortgage application volume from the previous week.

Bottom line: Assuming a borrower receives the average 30 year fixed rate on a compliant loan of $ 548,250, the payment last year was $ 67 more than this week's payment of $ 2,247.

What I see: Well-qualified borrowers can get the following fixed-rate mortgages locally at one point: A 30-year FHA at 2.25%, a 15-year conventional at 1.875%, a 30-year conventional at 2.5%, a 15-year conventional high balance ($ 548,251 to $ 822,375) at 1.99%, a 30-year conventional high balance at 2.69%, and a 30-year fixed jumbo at 2.875%.

Eyecatcher credit of the week: A 30-year fixed-rate mortgage at 2.875% with no closing costs.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or jlazerson@mortgagegrader.com. His website is http://www.mortgagegrader.com.

source https://seapointrealtors.com/2021/07/23/will-lenders-refund-fees-paid-for-a-market-downturn-that-never-materialized-pasadena-star-news/

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