Lending Guidelines, Mortgage, Mortgage Guidelines, Mortgage News

New, Mandatory Loan Fees For ALL Conforming Mortgages

September 7, 2012 by · Leave a Comment 

New g-fees threaten low mortgage ratesBeginning as soon as next week, new, mandatory mortgage fees will push mortgage rates higher throughout Northwest Indiana and suburbs of Chicago Illinois.

Fannie Mae and Freddie Mac are raising their respective “guarantee fees” once again.

Guarantee fees are fees that mortgage-backed securities providers charge to lenders for mortgage-related services including the bundling, selling and reporting of mortgage-backed bonds. Guarantee fees are also used to insure providers against credit-related losses.

Click here to see today’s mortgage rates.

As announced by the Federal Housing Finance Agency, effective for all conforming loans delivered to Fannie Mae or Freddie Mac, beginning November 1, 2012, guarantee fees will be raised by an average of 10 basis points per loan.

Conforming mortgages already average close to 30 basis points in guarantee fee per loan.

This is the second time this year that the FHFA has raised guarantee fees, with the most recent increase translating into an approximate 50-basis point worsening in consumer mortgage pricing. That today’s home buyers and refinancing households will soon pay higher loan closing costs as a result.

Click here to see today’s mortgage rates.

To use a real-life example, Freddie Mac reported that the average 30-year fixed rate mortgage was 3.55% nationwide this week for borrowers willing to pay an accompanying 0.7 discount points. 

Once the new guarantee fee is implemented, the discount points change: 

  • Prior to guarantee fee increase: 3.55% with 0.7 discount points
  • Post guarantee fee increase: 3.55% with 1.2 discount points

Post-increase, in other words, an identical Freddie Mac loan requires an extra half-point to get to closing, or $500 in additional closing costs per $100,000 borrowed.

Click here to see today’s mortgage rates.

These fees will soon appear on rate sheets, if they haven’t already.

Lenders know that it can take up to 60 days to lock a loan, approve it, fund it, then package it for delivery. Loans locked today, therefore, will likely be delivered to Fannie Mae or Freddie Mac after the November 1, 2012 deadline. As a result, mortgage pricing will soon include the effects of the guarantee fees.

Perhaps as soon as this morning.

Click here to see today’s mortgage rates.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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