Fannie and Freddie Cutting Fees?
Mortgage clearinghouses Fannie Mae and Freddie Mac announced that in addition to rescinding fee increases they may be scaling back current surcharges. During the Mortgage Bankers Association’s annual meeting, a discussion panel revealed that Fannie and Freddie are in the process of reevaluating pricing of their loan guarantees and working harder to keep borrowers out of foreclosure.
Currently, all but the most bullet-proof of applications are loaded with risk-adjustment fees–extra charges for higher loan-to-value ratios (in addition to the mortgage insurance required for these loans), ARMs or even fixed rate loans exceeding 15 years, interest-only, 40 years terms, investment property, multi-family property, cash-out refinances, condos, high-rises, mobile homes, etc., and big add-ons for credit scores formerly considered acceptable or even good. Fannie Mae’s Loan-Level Price Adjustment Matrix, gives this example:
Example 4: DU 7.0 30-YR FRM, Purchase w/Subordinate Financing, Credit Score = 670, LTV = 80%, CLTV = 95%
• From page 3: Adverse Market Delivery Charge = 0.250%
• From page 3: Representative Credit Score LLPA = 1.750%
• From page 5: Mortgage with Subordinate Financing = 0.250%
What this means in English is that the extras for an electronically submitted and approved (DU means Desktop Underwriter) application for a borrower with a 670 credit score and 5% down with a 15% second (perhaps seller financed) amounts to this:
• Total: 2.250%
On a $400,000 loan that’s $9,000 more than you had to pay before! Kind of an “anti-stimulus package” for the housing market. Hopefully there will be better news for real estate markets soon. And if not, there’s always FHA.
Tags: Fannie Mae fees, Freddie Mac fees, lower loan fees, mortgage loan fees
