A Little Bit of Good News on the Refinance Cost Increase

Fannie and Freddie announced last Tuesday that they are delaying their 50 basis point price hit on refinance loans on loans delivered or sold to them from September 1st to December 1st. We as a lender sell loans to both large correspondent lenders and banks like US Bank, Wells, Chase, PennyMac and others and our CEO has told us that most lenders will still implement this new price hit effective September 1st or as late as September 15th. Why so early?

Because the loan has to be delivered to Fannie or Freddie by November 30th to avoid this extra fee/tax. For most lenders and banks this means the loan needs to be closed by October 31st as many lenders and banks take 30 days to sell their loans to Fannie and Freddie. And most lenders and banks take 60 days or longer to close a refinance. Thus, this extra fee/tax will either stay in effect or go into effect next week probably with most lenders. 

Thankfully Draper & Kramer also sells loans directly to Fannie and Freddie and we move much faster than nearly every other mortgage lender or bank. We will NOT implement this extra fee/tax on refinance loans until September 28th we have been told. And we must close these refinances by November 19th to give us enough time to sell the loan to Fannie or Freddie before this additional fee/tax goes into effect on December 1st. 

Further, our CEO said we will only charge 25 basis points extra instead of 50 basis points and it will be a gradual worsening of pricing beginning on 9/28 when refinance pricing worsens by 5 bps, and then the next day pricing will worsen by 5 bps, and then next day, etc. The full 25 bps charge from us will only go into effect on refinances locked on October 2nd or later. And remember this price hit ONLY applies to conventional loan refinances, not purchase loans and not to FHA or VA loans at all. 

Thus, if you have clients looking to refinance who want to avoid this extra fee/tax please have them contact me right away.