BrandonBogle wrote: ↑Thu Aug 13, 2020 9:58 am
Folks, I get the anxiety around this new fee, I really do. But keep in mind that market rates themselves could move 0.5% from week to week anyways. This is honestly no different, just that we know when and how much will change.
I wouldn’t worry about this or change any plans because of it. If someone gave you a 2.5% loan at $X dollars, but you didn’t lock, it easily could be 2.5% at 1.05*$X when you go to lock.
Someone on Slickdeals posted earlier this week getting offered 2.5 or 2.625% with a $6,500 lender credit, but didn’t immediately lock. When they called the lock the next morning, it was the same rate but $3,000 in lender credits. That was before all this happened. This is the same kind of impact and really nothing to fuss over.
I really appreciate your posts and sharing your experience in this thread. But I think this is a bigger deal than you are making it out to be, as explained here:
http://www.mortgagenewsdaily.com/consum ... 52069.aspx
The article explains that even though it's a .5 point fee, the way it was suddenly sprung on the mortgage market without any warning has caused lenders to overreact, defensively (as most businesses do when faced with unpredictable suprises). So the actual cost on average added onto loans by lenders is working out to be closer to 1 point. That's a lot to suddenly stack on practically every loan in the market.
In addition, because it was sprung on lenders so out of the blue, they didn't have time to sort everything out and most lenders just applied the additional fee to all loans, even purchases, even though it's only being applied by Fannie Mae to refinances. Hopefully that will sort out and get readjusted soon, but that's a completely unintended side effect for purchasers.
In addition, even though the .5 point fee is only supposed to apply to refinances that settle after September 1, most lenders just applied additional costs to all unlocked loans including the ones settling before September 1. Another adverse affect on loans that Fannie Mae was not targeting.
Moreover lenders may turn out to be gun shy about lower rates back down too much, even for purchasers, because they may now be pricing in the uncertainty of what Fannie Mae will do next.
So Fannie Mae didn't just tack a .5 point fee on refinances. The sprung something on lenders out of the blue and the unexpected nature of the action caused a much more significant adjustment upward in loan costs than just the .5 point fee. It spilled over in the the purchase market, which was not intended by Fannie Mae, and onto loans settling before September 1. And it will probably leave lenders pricing in higher costs overall into the future, because they now have to account for Fannie Mae doing things out of the blue with no warning.