Mortgage Watch

There is a tremendously important development to be aware of.  The net effect is that rates are about to go up and, in some cases, they already have.

The culprit is the new “adverse market fee” announced for all refinances guaranteed by Fannie Mae or Freddie Mac on or after December 1st.  To hit that date, lenders need to be proactive, therefore your clients loan would need to close by 10-31-2020! (the cut off date policy will vary by lender).

The fee will result in rates moving higher by.25% (or in additional closing costs equal to 0.5% of the loan amount).  While that might not sound significant, this is the biggest change of its kind, EVER!  We already had a sneak preview of the fallout when the fee was implemented WITHOUT advance notice in early August.  Rates reacted swiftly before recovering after the fee was delayed. However, the MBS (mortgage bond market) is under selling pressure.  I believe due to this impending government fee that will “devalue” current holding, so bond traders are selling into the news. Not good!

Mortgage watch

What about purchase loans?  After all, the fee specifically applies to refinances, so purchase loans should be safe, right?  This is mostly true, but not unequivocally.  While the fee won’t show up as a separate line item on purchases, some lenders may simply be more conservative when setting their base rates.  Also, consider higher demand for refinances as borrowers rush to lock.  This can increase turn times for purchase borrowers, and longer turn times mean slightly higher rates, all other things being equal.

Bottom Line: the sense of urgency should still be there for purchase mortgages as well as refinance loans. LOCK NOW!

Rates are still amazingly low!

Mortgage watch


Keith Murphy Branch Manager – Essex Mortgage NMLS #330827

Direct: 714-309-1140


About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 46 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and sons Matt and Jeff, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 26 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, paper shredding and e-waste recycling event, an Easter egg hunt, & a Meet Santa Event.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.