So you have been a prudent borrower. You have paid your bills on time. You have a great credit score. What do you get for being a prudent borrower? More fees!
Fannie has already added a fee and soon Freddie will be adding fees for insurance on all borrowers. Fannie added .25% up-front charge on all mortgages.
These while the FHLBs are bailing out Countrywide. Why is the federal government giving loans of $51 billion to Countyrwide? Shouldn't the fed be charging a fee for the risk it takes just as the GSEs are charging us the fees?
Fannie is also raising down-payment requirements for some loans. My question is why didn't they do this before?
We are finally seeing some sanity in the mortgage business. Had the fed been awake, this would have stopped long ago. Thank you Mr. Greenspan for the mess.
Loan applications have been so slow lately, says Lou Barnes, a mortgage banker in Boulder, Colo., that it feels like "our client base today is limited to people who don't read the newspaper or watch television."
In a statement, Fannie said the new fee is needed "to ensure that what we charge aligns with the risk we bear." The National Association of Home Builders labeled the fee "a broad tax on homeownership." More than 40% of all mortgages outstanding are owned or guaranteed by Fannie or Freddie.
The fee is the latest in a series of moves by Fannie and Freddie that raise the cost of credit for some borrowers. Late last month, they imposed surcharges that affect mortgage borrowers who have credit scores below 680, on a standard scale of 300 to 850, and who are borrowing more than 70% of a property's value. For example, someone with a credit score of 650 would pay a surcharge of 1.25% of the loan amount for a mortgage to be sold to Fannie. On a $300,000 loan, that would mean extra fees of $3,750. The fee could be paid in cash or in the form of a higher interest rate than would normally apply.
Triad Guaranty Insurance Corp., Winston-Salem, N.C., this month stopped providing mortgage insurance on option adjustable-rate mortgages, which carry low introductory rates but can lead to a rising loan balance. Triad also said it would no longer provide mortgage insurance for loans that exceed 97% of a home's value. It set a 90% threshold for loans in four states where home prices have been dropping fast: Arizona, California, Florida and Nevada. "We want to look for people who have more equity rather than less equity" in their homes, says Triad Vice President Jerry Schwartz.
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