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Mortgages: Risky Loans to Cost More Thanks to Fannie Mae

Realtors are up in arms over a plan by Fannie Mae to more than double its charges for some high-risk loans. According to the Wall Street Journal (WSJ), the Federal Housing Finance Agency (Fannie Mae and Freddie Mac’s regulator) posted the new charges on one of its web sites a week ago.

The WSJ calculates that someone with a below par (but not truly terrible) credit score, who is buying a condominium on a 30-year fixed rate mortgage, initially with interest only payments, and with a 20 percent deposit, would pay under the planned scale of Fannie Mae fees 3.25 percent of the loan amount–up from 1.25 percent at the moment.

However, if introduced, the new fees will be effective only from April 1st. So anyone likely to be affected has a real incentive to buy now.

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