Fannie Mae Raises Mortgage Fees

Fannie MaeFannie Mae will be raising its mortgage fees this spring in an effort to cover its risk, or perhaps to make up ground for the losses it felt with the housing downturn. So although homebuyers might benefit from the lower prices on homes for sale, you'll be paying more in fees, when and if you qualify for a Fannie Mae mortgage loan.

The increased fees just might make it harder for even buyers with stellar credit scores and decent down payments, reported the Washington Post. That's because if you roll the fees into your loan rather than pay the extra thousands out of pocket, you'll have to qualify for a higher monthly payment.

If your credit score is less than a 740 and you finance more than 75 percent of the value of your home, expect to pay anywhere from 0.250 percent more up to 3.250 percent more in fees depending upon your credit score and your loan to value amount.
For example, someone with a 700 credit score and a 25 percent or lesser down payment, will pay a fee equal to one percent of the loan value. To escape any fees, your credit score needs to be higher than 740 and you'd need to put down more than 25 percent of the value of the home.

Fannie Mae and Freddie Mac, account for nearly three-quarters of all housing loans, about the same as it did nearly a decade ago, and given delinquencies are increasing and foreclosures have climbed to all-time highs, it's no surprise that Fannie Mae, like any business, needs to proactively cover its losses. That means the failure of others to live up to their end of their agreement gets passed on to everyone in the form of higher fees.

"NAR is against increased loan costs, and we will encourage legislators to continue to raise our concerns with these fees in the new Congress," Sara Wiskerchen of the National Association of Realtors told AOL Real Estate. "We are concerned about consumers trying to take on increased costs to get loans."

This is not the first time Fannie has increased some fees since the government took over Fannie and Freddie Mac in 2008. In 2009, as the Wall Street Journal reported, Fannie raised some of the fees it charges to lenders when it buys or guarantees certain types of mortgages. The fees generally are passed on to consumers.

Your only solace might come from purchasing a foreclosure at a huge discount and have it appraise for far more than its purchase price. The
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Fannie Mae fees are based on loan to value, not purchase price. However, often times it is determine that a home is only worth what someone is willing to pay for it.

Similarly, in an effort to reduce expenses, Freddie Mac advised its HomeSteps Listing Brokers in December about some reductions in the commissions it will pay for properties owned by Freddie Mac (typically REOs) and listed with a real estate broker on or after January 1, 2011.

For 13 states, the commission is being reduced from 7 percent to 6 percent, which will be split 50-50 between the listing broker and selling agent. The affected states are Georgia, Indiana, Iowa, Kentucky, Michigan, Nebraska, New York, North Carolina, Ohio, Oklahoma, Vermont, and West Virginia.

Freddie also will reduce the commission for large-volume brokers dealing with 100 or more properties in its HomeSteps Connect. Their commission will drop from 6 percent to 5.5 percent, split as 3 percent to the selling agent and 2.5 percent to the listing brokers. The reduction to 5.5 percent for larger capacity brokers applies to 37 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands, but does not apply to the states where the commission is being reduced to 6 percent across the board.

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