question for mortgage brokers (April 1st 2009)....is there a new fee for loans higher than 417K even if conforming? (interest rate, credit score)

[aneftp]

My sister lives in the Washington DC area and her broker left her a message on Saturday (which was unusual).

I think I found the Los Angeles Times article titled, Feb 15th 2009

"Fannie Mae, Freddie Mac are raising fees, toughening rules for credit scores and down payments"

Under the new guidelines, even applicants who assumed that their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30% or higher

In a nutshell, in higher cost areas like Washington DC (where temporary conforming mortgages are 625K) I believe mortgage brokers are going to start these fees very soon for all loans higher than 417K unless the refinancer or new buyer has 30% equity. My sister owes 600K on a 800K mortgage. She thought she would be able to refinance at the "conforming rates since the temporary conforming rates for Washington DC (Fairfax County) were 625K at an interest rate of 4.875 with 7/8 of a point 30 year fix. But her mortgage broker said unless she refinances NOW (like within the next 2 days) additional fees will be added unless she comes up with another 30K (5%) or they will charge her an additional fee (maybe 0.5 points even with a FICO of over 800)

So is this true? It certainly seems true.

Under Fannie's and Freddie's new guidelines, even applicants who assumed that their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30% or higher. For example, a buyer with a FICO score of 699 who can bring a down payment of about 25% to the table will now get hit with a 1.5% "delivery" fee at closing under the new guidelines.

A buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO -- once considered a platinum guarantee of the best rates available -- will get dinged with a quarter-point add-on.

Here is the link to the entire article (you may have to sign into the LA times website to read it) This additional fee seems like a very bad idea especially for high cost living areas. This will not stimulate or stabilize housing. Does the Obama administration know about this? My best guess is they are going to let these homeowners fend for themselves without any government help. Why did Freddie Mac (basically under government/taxpayers control do this?); 20% downpayment is enough. Now they want 30% downpayment without incurring extra fees.

Fannie Mae, Freddie Mac are raising fees, toughening rules for credit scores and down payments - Los Angeles Times (http://www.latimes.com/business/la-fi-harney15-2009feb15,0,1046151.story - broken link)

[Daddys///M3]

I'll have to look into it. There are additional pricing hits for super conforming aka conforming jumbo now, so it sounds reasonable per the new Fannie/Freddie LLPA's.

[bornandraised atl]

I have heard this and it is shocking that it has not been politicized yet....it has been discussed that lenders separate the charge and list it as a Fannie Mae or Freddie Mac charge.

I do not want to get too 'mortgagey' for you but --- it will be intereting to see how this unfolds - Fannie/Freddie has contracts with lenders that are in place and this change may or may not effect every lender at once - or we are back to a major question about government ownership and the voiding of contracts --- anyway --- as I see it now it means higher rates for conventional loans....

this may seem unbelievable, but it is just another day at the office for mortgage folks...chagne, change, change...