New Fannie, Freddie Closing fees will be increase....
You know how the auto insurer raises your premium after an accident? Something similar is happening to mortgage fees. They're getting more expensive for a lot of people.
Many borrowers will be socked with a fee that amounts to $250 for every $100,000 borrowed, just because the mortgage market has gone so bad. Other customers will take bigger hits because their credit scores are lower than 680 and they're borrowing more than 70 percent of the home's value.
The fees will be tacked onto mortgages guaranteed by Fannie Mae or Freddie Mac, the government-sponsored enterprises that help keep money circulating for home loans. The companies say they introduced the new charges to compensate for the risks inherent in guaranteeing mortgages in an era when house prices are declining, delinquencies are rising and mortgage investors are losing money. Soon, all lenders will pass along the new fees, either as closing costs or by charging higher interest rates.
In this tight financial market why they are moving this direction:
More risky market - Banks are unwilling to take more risky loans. so if you have lower credit score or ratio of your loan to the value of the home is higher look for higher fees or interest rate.
Less comptetition- Mortgage professionals don't believe the fees are solely about risk. They suspect it's also about market power. Before this year's mortgage meltdown, Fannie and Freddie had a lot of competition in the business of securitizing mortgages. Much of that competition has evaporated, leaving Fannie and Freddie free to add fees, and there's little that lenders and brokers can do about it.
I personally fee today's borrowers pay for yesterday's mistakes.
Source:Bankrate.com
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