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Fannie Mae - New Fees a Kick in the Gut?

By
Real Estate Agent with Real Estate Teams LLC

Your Distressed Property and Short Sale Expert in Maryland

 Just like Freddie Mac did last fall, Fannie Mae will be adding a new schedule of add-on fees for borrowers to pay, either up front or financed into their mortgage, wether they have great credit and a large down payment or only fair credit and a not so big down payment.

Since foreclosure and short sales have been so costly to Freddie and Fannie, which together continue to fund or guarantee two thirds of new mortgages, they are trying to prevent further losses by initiating a multilayered risk based fee system.

Each risk factor has a separate add-on fee which is totaled and added to the buyers closing costs. Some real estate(condos) types are a higher risk factor, lower credit scores, lower down paments, investment properties, manufactured homes, and intererst only loans are also on the list.

All loans will have an adverse market fee of 0.25%

Even someone with a credit score over 800, and a 25% down payment will probably pay another 0.25% risk fee, but someone with a FICO score of 679 and a < 20% downpayment may be hit with a 2.75% risk fee. Add that up!

Yes, they cast taxpayers at least $150 Billion, and "we" now own Fannie and Freddie, but are they are bitting the hand that feeds them?

My advice - HURRY, and get your mortgage loan in order before these fees hit you this spring - do not tarry!

Private lenders may try to out compete, but most of their loans go to F&F, so they must follow the guidelines,, again HURRY i fyou plan to buy.

Dennis

Working with Distressed Homeowners to Avoid Foreclosures

www.MarylandDistressedProperties.com

www.Frederick-MontgomeryCountyHomes.com

 

Comments (18)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

Can't believe all the fees associated with loans it is good to know all these fees before buying.

Jan 08, 2011 03:39 AM
Indera Coggins
Re/Max 100 - Dunkirk, MD

Wow Dennis, this is scary. How the heck are these buyers supposed to get around it. As it is they are scraping every dime to get a loan to the table and now to add more fees to them. That is outrageous. I have a few that I am going to try and push it thru as soon as possible.

Thanks for the heads up, Dude.

Jan 08, 2011 03:40 AM
Deborah Byron Leffler BzyBee Real Estate Lady!
Keller Williams Realty Boise - Nampa, ID

This is awful!  Now what benefit is it to the buyers to buy a Fannie Mae Home?!?!  Just crazy!!!

Jan 08, 2011 03:42 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

And they wonder why there's a housing crisis... just one more government-imposed factor to slow down home sales.

Jan 08, 2011 08:57 PM
Ritu Desai 703-625-4949
Samson Properties - Chantilly, VA
Northern Virginia,Washington DC & Maryland Realtor

Dennis, I heard from some one yesterday while showing home. Do you know the effective dates?

Jan 09, 2011 12:51 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Dennis, appears to be another way to justify added fees. Thanks for the heads up.

Jan 09, 2011 01:17 AM
Anonymous
Dennis Helmstetter

Took a lot of searching, but here are the charts for Fannie Mae's new fee structure -

 very complicated!

Please share

 

https://www.efanniemae.com/sf/refmaterials/llpa/pdf/llpamatrix.pdf

Jan 09, 2011 01:44 AM
#7
Anonymous
Dennis Helmstetter

Took a lot of searching, but here are the charts for Fannie Mae's new fee structure -

 very complicated!

Please share

 

https://www.efanniemae.com/sf/refmaterials/llpa/pdf/llpamatrix.pdf

Jan 09, 2011 01:44 AM
#8
Joe Kenny
Realty Executive Midwest - Darien, IL
Better Than Your Average Joe

Scary stuff Dennis.  Thanks for posting.

Jan 09, 2011 02:25 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Dennis.. some good information to make people aware.... but this can scare people also.... you stated

"Even someone with a credit score over 800, and a 25% down payment will probably pay another 0.25% risk fee,"

Yes, any score over 740 will be a 1/4 pt more. But before these new changes, the fees have been out there for 2+ years.  If I didn't know any better, by reading your post, it would sound like Fannie is just now doing this. It was already more expensive a few years ago. If the borrower is talking to a very good loan officer who is not afraid of FHA.. in most cases, depending on the borrowers goals, they would know anyone with less than a 680 credit score and less than 20% down would be more expensive for that borrower. In many cases, with less than a 680, you would need 10% down or more because of the MI companies and what they will and won't do.

Here is that chart to show what the current add-ons are and what will go into affect on April 1st... which is something else that you don't mention... the actual date. Someone reading this now might panic when they have time.

Pricing hikes for conventional loans taking place April 1st 2011

jeff belonger

 

 

Jan 09, 2011 02:33 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

In my opinion....This won't slow down housing.... Please read the link that I included above... as I mentioned to Dennis, there have already been these pricing penalties for the last 2 years. They are just adding about 1/4 to 1/2 a pt more. Depending on your credit score and down payment, FHA loans were already more attractive... and depending on your goals. Yes, it makes buying a tad more expensive... but they could just build it into the rates.. 3/8 of a pt will raise the rate an 1/8 of a percent. One can just pretend that rates actually went higher... we are still in the high 4's to low 5's. Less than 2 years ago, rates were in the 6's.  People still bought... people not buying will be more predicated on the economy, their confidence level... jobs.. unemployment.. food prices... again, just my opinion, but this alone won't slow down people buying. Because what is not mentioned in this post is that currently there have been these pricing adjustments, eevn since April of 2008... thanks

jeff belonger

Jan 09, 2011 02:39 AM
Ritu Desai 703-625-4949
Samson Properties - Chantilly, VA
Northern Virginia,Washington DC & Maryland Realtor

@Dennis, thanks for the email and the link. You are correct the pdf is very confusing/complicated.

 

@Jeff, thanks for the update on the convention loan. I have clients who bought new construction and they won't be ready till June/July that will def. affect their mortgage.

 

Jan 09, 2011 02:50 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

I received an email about this from one of my LO's the other day & I really didnt' get a chance 'to process' the costs yet.  You've done a nice job explaining that for me.  I've got a question - all the people that are receving loans now HAD NOTHING to do with the former problems.  I don't know of anyone that has gotten a loan recently that has done a short sale, foreclosure, etc.  So the current people applying have a different default scenario that has been tightened 200% or more.  But, they are still paying because Freddie & Fannie screwed up years ago.  It's no longer just MIP, it's more.  It will give RIP to some new loans & throw out another whole set of buyers to help clear up the foreclosure inventory.

Hope my thoughts make sense here. Sins of the past kind of thing .....

Jan 09, 2011 03:32 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

@ Ritu... my pleasure. In regards to your comment, that the chart is confusing... how is it confusing? If you click on my link above.. in that post, that is the main chart... you basically look at what credit score you have and what down payment you have, and follow both lines until they meet... and there is your pricing adjustment. As stated, these adjustments have been around for 2 + years... Fannie is just adding a 1/4 to 1/2 pt in most scenarios... thanks

jeff belonger

Jan 09, 2011 03:50 AM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

It's just more expensive to get loans these days and requires that the MLO understand the options and also the borrowers needs and goals.

Jan 09, 2011 08:14 AM
David Zuckerman
Millennial Home Loans, LLC - Sykesville, MD
Mortgage Broker - Low-to-no downpayment mortgages

I understand charging more to mitigate risk.  The fact is loans originated today are performing extremely well. 

These added fees have everything to do with the continued losses that Fannie and Freddie are experiencing from legacy loans originated prior to the housing market meltdown. 

Jan 09, 2011 10:51 AM
Lorraine or Loretta Kratz
Crescent Moon Realty, Inc. & Land N Sea Auctions. - San Marcos, CA
Certified Negotiation Consultants

It seems that we are on this merry go around and it keeps going around ---I just do not see a very bright light at the end of this tunnel.

Jan 09, 2011 11:47 AM
MeLisa Minter, Realtor
Minter Real Estate Services - Taylor Lake Village, TX
Bay Area Houston Real Estate Agent

Thanks for this info Dennis and Jeff.  I rarely work with buyers but this is great information to have.

Jan 09, 2011 02:26 PM