Consumers Pay If Payroll Tax Bill Raises Fannie, Freddie Fees
There is currently proposed legislation in Washington continue payroll tax cuts that began January 1 and expire December 31. The bill also includes a provision that would increase ‘mortgage guarantee fees’, meaning that Fannie Mae and Freddie Mac would charge mortgage lenders more to guarantee repayment of new mortgage loans. If it happens, what’s the increase?
The final amount will be determined by the FHFA but shall not be less than an average increase of 12.5 basis points for each origination year or book year above the average fee imposed in 2011 for a guarantee.
It would raise over $30 billion, and I’m sure the costs would be passed on to borrowers in the form of higher rates.
That said, many mortgage traders think the bill faces an uphill battle because it negates other administration efforts to stabilizing the housing market. More on the payroll tax bill and the Fannie/Freddie provision in the Mortgage News Daily link below.
Fannie, Freddie Fee Hikes In New Payroll Tax Proposal