“Adverse Market Fee”

What is an “adverse market fee” you might ask. The answer is that it is a new way in which government-sponsored enterprises Fannie Mae and Freddie Mac plan to make up claimed losses from COVID-19.

The appraisal market is in tatters for several reasons, this is the most recent and it was a whopper. The agencies, Freddie Mac and Fannie Mae were going to get .5% more for servicing on every refinance they did, AFTER September 1st, 2020. To make sure they (the banks) got their extra .5%, they put the brakes on the already slowed down appraisal services. The .5% is only on refinances, but it rolled over to the purchase market as well. COVID-19 started the problem and it caused a 2 month back up back in April and June.

Now the Federal Housing Finance Agency, a group that has regulatory authority over Fannie and Freddie, has issued this decree that they have to wait until December to collect the extra income, and it is billions of dollars. This move is good. Add to this the concerns the banks have about a market collapse and you can see where the problems are.

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