Last week, Fannie Mae raised costs for many borrowers by adding a 0.25 percent up-front charge on all new mortgages it buys or guarantees that settle on or after March 9, 2008. This fee is sure to be passed on to borrowers. On a $350K mortgage, that's an extra $875 in fees. Fannie Mae says the new fee is needed "to ensure that what we charge aligns with the risk we bear". Freddie Mac is expected to come out with a similar fee soon, according to a source familiar with the situation.
This fee is the latest in a series by Fannie and Freddie.
- Last month, Fannie and Freddie imposed surcharges that affect borrowers with credit scores below 680 and who are borrowing more than 70 percent of a property's value
- Fannie recently raised down-payment requirements for loans it purchases or guarantees in areas where house prices are falling (isn't that pretty much everywhere?)
- Even more recently, Fannie has even begun rejecting loans outright, regardless of credit scores, due to the property being in an area of "diminishing market values" (check out this post for more and for a real life example)
To give you an idea of how many borrowers are affected by the actions of Fannie and Freddie, Fannie and Freddie own or guarantee more than 40 percent of all mortgages outstanding.
Perhaps this is one of the costs of cleaning up the mortgage crisis mess. Unfortunately, the ones who took the risks and made bad financial decisions are now being saved by the government while the ones with decent credit and even a 20+ percent down payment are getting penalized and paying for the clean up.
Source: WSJ.com
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