The “Adverse Market” fee goes into effect December 1, 2020.

The Federal Housing Finance Agency (FHFA) recently announced that a new “adverse market” fee will soon be added to any refinances that involve Fannie Mae or Freddie Mac. In essence the FHFA says that this fee is needed to support the banking industry.

Loan balances under $125,000 are currently exempt from the additional fee; however, all other mortgages that will eventually be sold to the two government-sponsored enterprises will be subject to a fee that is equivalent to 0.5% of the loan balance. On a $250,000 loan, for example, this fee would be equivalent to $1,250.

Since about half of the mortgage loans originated in the United States are eventually bought by either Fannie Mae or Freddie Mac, this fee has the potential to affect a lot of borrowers.

The fee takes place December 1, 2020 and will be added to the closing cost. However, there is still time to refinance your home before the fee takes effect.

The fee was originally supposed to be implemented on September 1, 2020, the agency ultimately decided to delay its implementation until December 1, 2020, amid an industry backlash.