According to this article from the Los Angeles Times by Kenneth Harney, Fannie Mae is going to raise a variety of mortgage fees in the new year, matching a similar plan from Freddie Mac. The increased fees will likely result in more expensive mortgages for many people.
The government sponsored entities (Fannie and Freddie) have been at the center of the housing crisis, and were seized by the government and placed into government conservatorship under the Federal Housing Finance Agency (FHFA) in September 2008. Although there is considerable debate over who is to blame for the housing crisis, Fannie and Freddie certainly contributed to some degree. Since that time, they have been the recipients of $150+ billion worth of taxpayer money, with the government pledging an unlimited amount of money to backstop the GSE’s losses.
Despite their issues, Fannie and Freddie are essentially propping up the entire U.S. mortgage market, according to the article they fund or guarantee around two thirds of mortgage originations. As a result, when they change their pricing or fee structures, these changes reverberate across the industry and generally translate to higher prices across the board.
The new risk hits could translate to hundreds to thousands of dollars depending upon an individual’s credit score, loan-to-value ratio, and the type of property they are purchasing.
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