Rental Property Investor · Albuquerque, NM · Member since 2020 · 50 posts · 102 votes
Is anyone in the process of refinancing their property? Is everyone aware of these changes?
Key points
-Mortgage giants Fannie Mae and Freddie Mac just announced that they are raising fees for lenders on all mortgage refinances. The change is designed to shield the two from the additional risk brought on by the coronavirus pandemic.
-The price adjustment adds 0.5% of the loan amount to the consumer's cost. That amounts to $1,400 on the average mortgage originated today.
-It will begin in September, which means it will basically apply to all refinances that aren't already in process.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y
@Ryan Hazelwood my lender here in Chicago just told me about this. Lenders are beyond swamped trying to keep up with the refinance wave as they are not able to onboard processors fast enough due to the pandemic. The low interest rates may actually end up being a bad thing when it is all said and done. They are making people make poor investment decisions based on a the cheap money.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Well, FNMA and FMAC are CMBS lenders. They take your loan and put it in a portfolio with a 1000 other loans.
Then they sell it off with a predictable yield.
If someone wants to refi/prepay, they just can't take that loan out of the portfolio, they need to replace it with something that gives the same yield.
When there was a lower percentage of refi/prepays, they had sufficient reserves, however, at <3% rates they're getting all kinds of pre-pay/refi requests now.
Not enough reserves means higher fees to increase them.