Fannie’s New Rules

Apr 6th, 2008 @ 5:51 PM by Alden Smith

Seems like every time you turn around, something new is coming down the pike.  I have read about more stimulus and relief and bailout plans in the past few months than I have read in a lifetime.  To me, it seems like a real indication that this time, we are really in the soup.  Not only are people facing mortgage problems, but the cost of gas and groceries has taken a huge leap, making me wonder at times where this will all head to.

Now, Fannie Mae has come out with new guidelines.  These guidelines state that Fannie will charge higher fees on mortgages with certain characteristics. The buyers must pay these fees at the closing table, or face higher interest rates.  The people who will get hit with these fees are those that are refinancing homes and taking a cash out.  Taking a cash out refi of 85% of your home’s value will allow Fannie to hit your lender with a fee of 0.75 percent of the loan amount.  It will then be transformed into an additional one-eighth or one-fourth of a percent to the interest rate.

Before long, that fee will depend a lot on your credit score.  Those with credit scores of 720 or above will be okay, but the fee doubles to 1.5 percent of the loan amount for people with a credit score between 660 and 680.  That will translate into about 3/8 of a percentage point, a good chunk of change.  The adjustment comes about because of the high percentage of defaults.

Fannie has other things in the works right now, but it is a bit premature to say anything unless I get better data.  Stay tuned – news at 11…

One Response to “Fannie’s New Rules”

1. Mortgage says:

   April 8, 2008 at 1:17 pm

   Fannie is making it tougher for homeowners to refinance and homebuyers to purchase. The are making these moves to try and prevent a future mortgage meltdown like the one we are seeing now.