Guarantee Fees to increase mortgage rates. Thanks to who?
Well here we are amidst the lowest rates in history and the implementation of the Guarantee Fees is taking place. You may be wondering what the heck that is? These are the fees charged by mortgage backed securities providers (Freddie Mac & Fannie Mae). So what does this mean?
You can thank those who created, sponsored, passed, and signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. So while your saving a few bucks a month on social security tax, you are being impacted if you buy or refinance your house. Another reason to research who you vote for this year.
It is charged to protect against credit-related loss including sub-fees to cover internal expenses such as;
- Reporting to investors and the SEC
- Managing and administering the securitized mortgage pools
- Selling MBS to investors
In effect it will change pricing, and thus effect rates. So while the market bears low rates. The implementation of these “G” fees by investors is starting. These investors are the ones who mortgage bankers, and brokers alike use to get funding and servicing of your mortgage.
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Ray Williams, Branch Manager, Summit Home Mortgage