FHFA to Impose Hefty Upfront Fees on Second Home Purchases

Housing Finance

In a move strongly opposed by NAHB, the Federal Housing Finance Agency (FHFA) today announced increases for upfront fees that Fannie Mae and Freddie Mac will charge for second home mortgage loans and certain high balance mortgage loans that exceed standard conforming loan limits. These fees will significantly increase the purchase cost of a second home and some homes in high cost areas. Beneficial pricing on the agencies’ affordable loan products will not be increased.

Effective April 1, 2022, upfront fees on certain high balance loans sold to Fannie Mae and Freddie Mac will increase between 0.25% and 0.75%. Also effective on April 1, 2022, the upfront fees for mortgage loans on second homes will increase between 1.125% and 3.875%. Fees will vary based on the loan-to-value ratio.

Under the plan announced today, the buyer of a second home with a $300,000 mortgage loan amount and loan-to-value ratio of 65% will pay an additional fee of $4,875 if their mortgage is acquired by Fannie Mae or Freddie Mac. Prior to the effective date of today’s announcement, the same buyer would pay no additional fee for the comparable mortgage.

“With the nation in the midst of a housing affordability crisis and many more workers electing to telework, this is exactly the wrong time for federal regulators to be raising fees on homeownership and second homes,” said NAHB Chairman Chuck Fowke. “If FHFA is truly interested in promoting housing affordability, the agency would not be taxing home buyers to pad the capital positions for Fannie Mae and Freddie Mac.”

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