Fannie Mae & Freddie Mac Guarantee Fees Are Going UP!

Fannie Mae & Freddie Mac Guarantee Fees Are Going UP!

What does that mean? It means that the cost of obtaining a mortgage is going up in 2012.

Why is this happening? Because Congress recently, (December 2011) passed a short-term extension of the payroll tax cut, the extension is being financed with a hike in the guarantee fees for Fannie Mae and Freddie Mac.

Who pays these increased fees? Guarantee fees are charged to mortgage companies who in turn pass the cost of those fees on to consumers. This will affect new loans and well as mortgages that are being refinanced.

Is any of the money collected going to repay the taxpayer for bailing out Fannie and Freddie?  No, the $35 billion expected to be generated from these increases, over the next 10 years, will go to the U.S. Treasury and will be used to fund tax breaks and other government programs, e.g. paying unemployment benefits and maintaining Medicare reimbursement rates for doctors.

How did this happen? The vehicle for “robbing Peter to pay Paul”, House Resolution 3630 the “Payroll Tax Bill” passed by the U.S. Congress and signed into law by President Obama.

It should be noted: U. S. Taxpayers have funded Freddie and Fannie to the tune of $170 Billion as of December 2011 just to keep them operating. The idea that none of these funds will be used to offset these costs is mind boggling. But even more disturbing is the fact that legislators are setting premiums and then diverting the funds. Both Democrats and Republicans are responsible for passing H.R. 3630 and raising mortgage fees. Attempts by Mortgage Bankers, Realtors and home builders to prevent the increase were unsuccessful.

If you are interested in buying a home and are qualified, don’t wait. Home prices will rise in 2012 and mortgage rates have no where to go but up. Email or call (602) 793-1627 for a no obligation Statistical Market Analysis Consultation. As an informed buyer you’ll make better decisions.