Issues Facing Originators

As Refinance Fees Loom, Offer Borrowers Additional Savings

Written by Carl Tyree

A fresh urgency has been added to the current refinancing boom after the GSEs imposed a new refinancing fee that becomes effective Dec. 1.

Interest rates dipped below 3% in August and refinancing activity surged 84% over the previous year, according to Forbes.

In mid-August, Fannie Mae and Freddie Mac announced plans for a 0.5% refinancing fee on loans received after Dec. 1. The original date was Sept. 1, so the new deadline gives lenders a short time to help borrowers avoid the fee that adds $500 for each $100,000 of the loan amount — or an average $1,400, according to The Wall Street Journal.

Weeks, Not Months To Act

Keep in mind that to avoid the fees on refinance loans received by the GSEs before Dec. 1, originators need to factor in the 30–45 days it typically takes to close and also allow for additional time for the lending institution to deliver the refinanced loan to Fannie Mae or Freddie Mac.

It’s easy to determine whether your borrower’s loan qualifies for our reduced MI premium program. Simply request your quote through your LOS as normal or use Arch MI RateStar®.

In announcing the added cost, Freddie Mac stated its Market Condition Credit Fee resulted from “risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty.” Fannie Mae cited the same factors for the price adjustment it called an Adverse Market Refinance Fee in a recent Lender Letter.

Some programs have been exempted, including HomeReady®, Home Possible® and refinance loans with an original principal amount of less than $125,000, according to The Truth About Mortgage. The fee also won’t apply to jumbo loans not eligible for purchase by the GSEs.

Lenders focused on helping borrowers avoid the fee by completing refinances well ahead of the December deadline can also stand out from their competition by offering qualified customers additional savings on their monthly MI premium when refinancing their Arch MI-insured mortgages.

Available only from Arch MI, the RateStar Refinance Retention program requires that:

  • The borrower’s current loan must be insured with an active Arch MI certificate (either borrower-paid or lender-paid MI).
  • The new loan must be a rate-and-term refinance insured only with Arch MI’s monthly borrower-paid MI (BPMI) premium.

Check Today for Eligibility

It’s easy to determine whether your borrower’s loan qualifies for our reduced MI premium program. Simply request your quote through your LOS as normal or use Arch MI RateStar.

To use RateStarSM:

  • Access the RateStar portal on any of your devices, 24/7, archmiratestar.com.
  • Enter your master policy and quote details and then click Get Rates.
  • Click Get Rate under the Refinance Retention program card display.
  • Enter the borrower’s current loan number and property information.
  • Click Calculate Reduction.
  • Select Monthly Refinance Retention and print the PDF.

RateStar will verify whether the MI certificate is active, determine the new MI rate and calculate the new monthly MI premium.

If you typically submit quotes via a Pricing and Product Engine (PPE), please note that PPEs are not compatible with our program. You should submit directly from your LOS or use RateStar at archmiratestar.com to determine whether your borrowers’ loans are eligible.

What’s the probable impact of these new refi fees on your customers? We plan updates on this topic, and we’d love to include your thoughts. Send us an email to voice your opinion on whether low mortgage rates could help sustain significant refi activity, even with higher fees.

About the author

Carl Tyree

Executive Vice President, Chief Sales Officer
As Chief Sales Officer, Carl Tyree oversees Arch MI’s sales teams and manages customer relationship strategies. He was promoted to his current position in 2018. Mr. Tyree joined the company in 2013 as Vice President for National Accounts, where he managed the company’s relationships with the top 50 lenders, and became Senior Vice President for National Accounts in 2016.