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Strong advocacy brings delay in, exemptions from GSE refinance fee as virtual work continues

Thursday, August 27, 2020   (0 Comments)
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Amid pressure from leagues, CUNA, and others, FHFA delays fee increases, exempts refinance loans of less than $125k.

COLUMBIA, RALEIGH, and WASHINGTON--Steady, effective work by the Carolinas Credit Union League to keep credit union and consumer issues in front of decision-makers has again resulted in beneficial change, as the Federal Housing Finance Agency (FHFA) on Tuesday announced the delay until December 1 of a late-notice, adverse-market fee set to begin September 1. That work continues as broad opposition persists in calling for the fee’s withdrawal.

The FHFA also will exempt loans of less than $125,000, Fannie Mae's Home Ready, and Freddie Mac's Home Possible programs. Those exemptions will protect from unforeseen costs the low- and moderate-income borrowers seeking to lower loan rates or payments, or to access equity.

The delay comes just after Carolinas Credit Union League CEO Dan Schline joined his 33 state-level association peers and CUNA in a letter asking FHFA Director Mark Calabria to rescind the recently-announced 0.5% fee for certain refinanced mortgages purchased by Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac.

In the letter, Schline and association leaders note the fee’s already-detrimental impacts, including disruption of in-process loan applications, interruption of systems to include the fee, credit unions’ responsibility for the fee on locked-in mortgages, and substantial reduction of anticipated net income that would ultimately bring benefit to members.

Consistent communication with lawmakers and like-minded entities has aided swift response to the surprising August 12 announcement of the fee. CUNA joined in an August 13 statement by a coalition of housing, financial services, and public interest groups, and the League made direct contact with the Carolinas’ U.S. House Financial Services Committee members and U.S. Senators.

Credit unions also have had regular opportunities to share their perspectives in a series of virtual meetings with delegation members, including the most recent with U.S. Rep. Joe Wilson (R-SC2) and U.S. Rep. Alma Adams (D-NC12), herself a member of the House Financial Services Committee.

“(I)t does nothing to help the borrower, but helps the GSE trying to come out of their conservatorship,” Allegacy FCU Vicky Slate said of the fee in the League’s August 20 conversation with Rep. Adams. “That could make or break someone’s financial situation during these very challenging times.”

That same day, Sen. Thom Tillis (R-NC) joined bipartisan colleagues urging Calabria to require that the GSEs rescind the fee and avoid further harm to consumers. Their position echoes what the League, credit unions, and many others had expressed in the very short time since learning of the impending fee increase.

“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,” wrote the senators. “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.”

For more on the GSE adverse-market fee or other issues, reach out to VP Governmental Affairs Evelyn Hawthorne or VP Governmental Affairs (SC) Billy Boylson.

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