As we found out last week, guarantee fees for new Fannie and Freddie loans will be going up to pay for the two-month payroll tax cut.
Under the “unintended consequences” banner analysts were quick to point out that, given the increase is scheduled for ten years, Fannie Mae and Freddie Mac are not going away any time soon unless the government comes up with the money elsewhere.
Fannie and Freddie won’t absorb this increase, nor will lenders. It’ll be passed on to borrowers.
The increased g-fee, which makes it difficult for Congress to work on efforts to shut down Fannie and Freddie, based on current rates and a $200,000 loan, will cost the agency borrower about $11 per month.
“These institutions, which have been so costly to Americans and are so necessary to the housing recovery, should not be the piggy bank for future arbitrary tax policy,” head of the Mortgage Bankers Association Dave Stevens said.
Due to their government ownership, investors still view their agency (and FHA/VA) MBS’s as safer investments than those offered by private firms.
The law allows FHFA to phase in the fee over two years.
And there’s more mortgage fees born out of this bill. The bill also will raise the annual insurance premium borrowers pay on FHA loans by one-tenth of a percent.