Fannie and Freddie to Increase Fees

ImageStarting in 2012, Fannie Mae and Freddie Mac are expected to increase their fees, which could impact homebuyers depending on the risk of their loan or the location of their home.

Why is this happening? Fannie and Freddie were seized by the government in 2008 to help protect them from failing. That’s important because Fannie and Freddie (along with other government agencies) actually guarantee about 9 out of every 10 new home loans–and with the challenges that the housing market has seen recently, those guarantees have been extremely important. However, Fannie and Freddie have also cost the taxpayers more than $140 Billion. So Fannie and Freddie will gradually increase their guarantee fees and reduce the size of the home loans they purchase in an effort to save taxpayers money and reduce the amount of government involvement (by attracting more private funding to the mortgage market).

Here’s one example to get an idea of the potential impact. As the Wall Street Journal reported, if we calculate an increase of 0.1 percentage point (which is a number the White House proposed), we can see that a home loan for $220,000 would be increased by about $15 per month. While the increase may not be noticeable to all homebuyers, it’s still something to be aware of.

From Opes Advisers Mortgage Update Newsletter, July 8, 2013

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About MikeCastleRealtor

Mike Castle Real Estate Broker CalBRE#00620895 Cell: 831-588-1988 Fax: 831-435-7377 E-mail: mike.castle@mikecastle.com www.mikecastle.com Century 21 M&M and Associates 1500 41st Avenue, Suite 100, Capitola, California, 95010
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