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Opinion A mortgage fee that hurts the middle class

A for-sale sign on a home in Harmony, Pa., in April.
A for-sale sign on a home in Harmony, Pa., in April. (Keith Srakocic/AP)

Regarding the Aug. 22 Real Estate article ‘“Figures rise again amid new policy on refinance loans”:

The Federal Housing Finance Agency will begin charging an extra half-point fee on mortgage refinancings to “mitigate risk of future defaults” on conforming loans (loans up to $510,400). This is illogical and unfair.

Refinancing at a lower rate can significantly lower a homeowner’s monthly mortgage payment, enabling families to better afford necessities such as utilities, groceries and health care, thereby lessening the risk of default. For example, lowering the interest rate by 1 percent saves a borrower about $250 a month on a $300,000 loan. (Refinancings that simply lower the interest rate without increasing the amount owed are the overwhelming majority of conforming refinancings.) This fee will “not apply to non-conforming loans like jumbo loans used to finance larger loan amounts.”

The free-market American Enterprise Institute (AEI) thinks the fee is entirely appropriate. Edward Pinto, director of AEI’s Housing Center, said, “It would have been a dereliction of regulatory oversight not to have taken action.” Although AEI reflexively opposes nearly all regulations, apparently this one is fine, as it targets only the middle class and spares the wealthy.  

Mary Fraker, Washington

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