Attention Buyers! (and you sellers too)

Buyers in the market to buy a home, be aware that the U.S. Treasury Department is considering a new mortgage fee to fund the backstops it gives for loans purchased through Fannie Mae and Freddie Mac.


Analysts say the fee may be up to 1.5 percent of the borrower's mortgage, which would be a big increase from the current 0.25 percent that both Fannie and Freddie currently charge mortgage borrowers. Plus, it remains to be seen if this new charge would be in addition to that current charge!

So a buyer who needs and FHA mortgage for $300,000 could see an additional fee of up to $4,500 ... and the additional cost would just keep rising with the size of the loan. Talk about a reversal from the recently-expired homebuyer credit!

Additionally banks continue to significantly tighten their mortgage lending standards. On June 1, Fannie Mae put into effect the Loan Quality Initiative (LQI), which requires lenders to pull two credit reports along with additional verification checks on potential borrowers. Normally one credit report is pulled upon application, but now another credit report is being pulled just prior to closing.

That means even if you are initially approved for a loan, it can still be put on hold or cancelled altogether if your credit score changes or you take actions that change your perceived risk profile before the mortgage actually closes. And it's worth noting that this initiative is mandatory — affecting practically every mortgage lender now has to do this!
What does it mean to you? Looking to buy? Do it soon...Looking to sell?...Also, do it soon!

So, who out there thinks this will help home values?