Skip navigation
Watchlist Sponsored By :


Current DateTime: 08:27:54 09 Nov 2009
LinksList Documentid: 24355697

FEATURED QUIZZES


Current DateTime: 08:27:54 09 Nov 2009
LinksList Documentid: 33793611

Current DateTime: 08:27:54 09 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
Mortgage Fees Rising, Even for Prime Borrowers
By: Steve Liesman | 10 Dec 2007 | 02:49 PM ET
Text Size

Getting a mortgage is getting more expensive, even for borrowers with good credit, thanks to the subprime crisis.

Fannie Mae and Freddie Mac, the two government sponsored entities created to promote homeownership, are slapping new surcharges on loans they either buy for their portfolios or for which they provide guarantees.

The fees have sparked outrage among mortgage brokers and home builders. The new surcharges, which some lenders are charging now even though they don't take effect until March 2008, range from 0.75 percentage point to two whole percentage points on the value of the loan. That raises the cost of a $200,000 mortgage by anywhere from $1,500 to $4,000.

  Fannie & Freddie's Charges
Credit ScorePoints Charged
< 6202.0 %
620 - 6391.75%
640 - 6591.25%
660 - 6790.75%

The charges hit the least credit-worthy the hardest. They apply to all borrowers putting down less than 30 percent — which is just about everyone — and with credit scores between 620 and 680. These were previously prime borrowers.

Boulder, Colo., mortgage broker Lou Barnes says neither government sponsored entity has ever imposed such a charge and that this will hurt.

"You can’t cut one foot off with a blanket and sew it on to the other end," Barnes said. "The only way we can offset an upfront fee of a percentage point or two percentage points is to raise the interest rate by a quarter or a half of a percent."

The National Association of Home Builders calls it a tax on homeownership and says it points out Congress' failure to reform the government-sponsored entities.

"This is no time for Fannie Mae's business interests to take precedence over its mission responsibility," said Jerry Howard, chief executive of NAHB.

Fannie and Freddie have been under pressure to shore up their capital base amid the subprime meltdown.

They both announced plans to raise billions of dollars in capital while its regulator continues to insist on a capital ratio that is 30 percent larger than mandated by Congress.

Neither Freddie nor Fannie could be reached for comment.

They key here is that even while interest rates come down, lending standards for many borrowers have tightened. That could mean fees, like Fannie or Freddie put in place, an insistence on more money down, or even a refusal to lend in certain markets.

© 2009 CNBC.com
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • Do free market libertarians really believe what they say about ethics and shareholder value? The Big Money takes a look.
  • Jim Cramer
  • Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
  • On the anniversary of the fall of the Berlin Wall, many in the former Eastern Bloc recall communism fondly.
  • Gavel
  • Software, biotech firms, even banks are watching a particular Supreme Court argument today.
  • From politicians to CEOs to companies, here's your chance to vote for the winners and losers of 2009.
  • A new sinister Internet viruses can turn you into an unsuspecting collector of child pornography.
ADD COMMENTS
Remaining characters


Current DateTime: 03:21:08 09 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 08:52:06 09 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 06:53:35 09 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 08:52:07 09 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters