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Higher mortgage fees on the way

By Polyana da Costa ·
Wednesday, September 5, 2012
Posted: 6 am ET

Borrowers who want to beat higher mortgage fees should get moving. Conventional mortgages are about to get more expensive.

Fannie Mae and Freddie Mac will increase the fee they charge lenders to guarantee loans. The added cost will likely be passed on to borrowers. Fannie and Freddie own or guarantee about half of the outstanding mortgages in the United States. The higher fee does not apply to existing mortgages.

The Federal Housing Finance Agency says guarantee fees will increase by an average of 10 basis points. The hike goes into effect on Nov. 1 for certain loans and Dec. 1 for others. Lenders will likely price their mortgages based on the higher fees sooner than that to allow time for closing.

This is not a fee paid directly by the borrower. Lenders probably will recoup the extra expense by charging borrowers a slightly higher interest rate. In the current low-rate environment, a 10-basis-point increase may not make much of a difference on your monthly payments, but it's significant over the life of the loan.

For example, a borrower taking out a $250,000 30-year mortgage would pay about $15 per month with the hike. Pocket change? It adds up to about $5,400 over 30 years.

Why is the FHFA making mortgages more expensive? The goal is to minimize potential losses for Fannie and Freddie.

"These changes will move Fannie Mae and Freddie Mac pricing closer to the level one might expect to see if mortgage credit risk was borne solely by private capital," says Edward J. DeMarco, acting director of FHFA.

Do you agree with the fee hike?

Follow me on Twitter @Polyanad.

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September 11, 2012 at 12:41 pm

Folks, our entire system runs on greed. It's a useful motivator. The problem with housing market is that the mortgage lenders were able to sell the risk to Wall Street, thus removing themselves from the crash. The problem with the mortgage lenders was that the Affordable Home changes to lending standards and Fannie and Freddie enforcing those standards meant that banks and other lenders HAD to make loans to unqualified borrowers. We have met the enemy and the enemy is vote-greedy government.

September 11, 2012 at 12:35 pm

Judith Anne,
I am so sorry your ex cheated you so heartlessly. I am sorry you are in this position, really. I am 66 and heading there. All I can suggest is that you write to Obama and ask him for Obamabucks. Other than that, vote for Mitt. I have managed to hold on to my house, but it has been a real stuggle since I was downsized by my firm. I started my own business offering services that I do well: HR, Office Management, Bookkeeping, and I just added housecleaning. My small business clients are all also in trouble, so I don't know how long this will last, but it's worked so far. I also work at a local school and they pay fairly well - surprise. Don't limit yourself to just one job: think about anything you can do and charge for it. Don't be a sitting duck.

judith Anne Dellosso
September 10, 2012 at 11:32 am

thank you for posting my comments, I know God thanks you too!
God Bless, judith anne dellosso

judith Anne Dellosso
September 10, 2012 at 11:29 am

This raise of fees to Freddie Mac and Fannie Mae are not realistic at this time. I have had my mortgage since 1977,
yes it should be paid for, however, my x-who now is dead, embezzled 4 times in my marriage. I have struggled all my life
to pay my mortgage, and now I am a senior citizen of 72 yrs.,
please reconsider this raise. I will be affected on the Freddie Mac side.. I am in loan modification right now with boa. I need to get an answer from them soon, because my income has changed, and I am living from check to check. It is not easy to get a job
when you are 72 yrs. old, even if you use regenerist Oil of Olay
to look younger! I have applied to 3,587 positions. I have 29 years at NGC, and countless years of experience since age 15yrs.
with a special permit working as a page n library. Please reconsider, allow me to enjoy my last years I have to do God work
and teach Public Speaking and Leadershiup development in schools.
Please help me to get back on my feet!
thank you so very much, judith anne