The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac (the Enterprises) to delay the implementation date of their Adverse Market Refinance Fee until December 1, 2020. The fee was previously scheduled to take effect September 1, 2020.

FHFA also announced that the Enterprises will exempt refinance loans with loan balances below $125,000, nearly half of which are comprised of lower income borrowers at or below 80% of area median income. Affordable refinance products, Home Ready and Home Possible, are also exempt.

The fee is necessary to cover projected COVID-19 losses of at least $6 billion at the Enterprises. Specifically, the actions taken by the Enterprises during the pandemic to protect renters and borrowers are conservatively projected to cost the Enterprises at least $6 billion and could be higher depending on the path of the economic recovery.

Those expenses are expected to at least include:

$4 billion in loan losses due to projected forbearance defaults;
$1 billion in foreclosure moratorium losses; and
$1 billion in servicer compensation and other forbearance expenses.