The announced Fannie Mae/Freddie Mac refinance fee has caused significant disruptions to credit union mortgage lending, CUNA, the American Association of Credit Union Leagues (AACUL) and all 35 state credit union Leagues wrote to Federal Housing Finance Agency (FHFA) leadership Tuesday. CUNA previously issued a statement and wrote to FHFA Director Mark Calabria, and this latest letter provides a look at the effects of the announced fee on the credit union industry.

“Credit unions provide consumers with good faith estimates of closing costs, interest rates and other loan terms well in advance of loan closing so they can understand and determine if refinancing will help them reduce monthly payments, pay off high interest debts and/or make a large purchase,” the letter reads. “Unfortunately, the fee’s September 1, 2020, effective date has caused significant disruptions to applications throughout credit union loan pipelines.”

The requirement to quickly incorporate the fee into credit union analyses and systems have resulted in delays, and for borrowers who have already locked in their rates, credit unions themselves will absorb all the fees.

The organizations note one of the largest credit union mortgage lenders will be forced to cover more than $1 million in costs, while even a small credit union in Oklahoma will have to absorb nearly $275,000 in additional costs.

“Unlike large banks, which can absorb these costs with greater ease, credit unions use profits from refinancing to benefit their members,” the letter reads. “As a result, every unanticipated dollar that they use to pay this fee is a dollar that cannot be used to provide better and lower-cost services to members or provide patronage dividends at a time when they are needed the most.”