More Good News for Borrowers

The mortgage fee increase on loans backed by Fannie Mae and Freddie Mac that was supposed to go into effect this Spring, has been postponed by the FHFA for further evaluation. Fannie Mae and Freddie Mac do not issue loans, but instead purchase them and use these fees to safeguard against risky borrowers who may default.

The fees were set to add thousands of dollars to the initial cost of mortgages that are insured by Fannie Mae and Freddie Mac. Of course the amount of fees does depend on the amount of the loan and borrowers would have paid the fee up front in the closing or could have rolled the fees into the interest rate which could have ended up in high monthly payments by as much as a quarter percent.

As a result of the lower default rates in recent years, Fannie and Freddie have been able to increase their profits and pay back nearly all of the $187 billion tax-payer-funded bailout, thus making any fee increases unneeded.

Distinctive Properties, Inc.

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