The mortgage institution adds pressure to an already tight market.
Fannie Mae is raising the delivery charges on home loans. In their official announcement, the mortgage company published a new set of fees for affected borrowers – those with lower credit scores. Starting on April 1, those who have scores between 660 and 679 should take heed of a 1.5 percent charge for a cash-out refinancing. Before, a score of 720 is enough to take substantial perks from your loan but this year, a 0.75 percent charge is imposed.
According to an official statement released in the New York Post, Fannie Mae believes that “These are targeted pricing adjustments aimed at aligning price with risk for the highest risk products in the market today, including interest only loans, cash-out refinancings, low credit scores, high loan-to-value loans and condos.”
This goes to show that even a mortgage company currently in conservatorship is not allowing distressed borrowers from slipping in their financial obligations through higher standards. The additional fee may discourage homeowners from taking that refinancing plan since there’s a possibility of losing in the end. Higher premiums mean more difficulty in sustaining payments. It’s a tough credit market and Americans have no choice but to succumb to the rules of the game.
Analysis such as this by investment editor John Authers allows us to review Fannie Mae’s troubled stance since last year:
And yes, they badly need a fee hike but it would further hurt the mortgage market.