Since home prices have continued to fall, especially in selected Mainland markets, Freddie Mac is concerned that many more homeowners will default on their mortgage.  They also expect housing prices to decline further in 2009.  In light of this news, Freddie Mac increased several mortgage fees and created a few new ones.

Isn’t it ironic that the very people who will ultimately pay to bailout Freddie Mac (American taxpayers) are now the victims of the company’s new pricing scheme.

One of Freddie’s new fees is a three-quarters of one percent fee of the loan amount on certain condominium mortgages when the loan equals more than 75% of the estimated condominium value.  Simply put, if you can’t put down 25% of your condo’s purchase price, you’re subject to this new fee.  In Hawaii, that can cost several thousand dollars.  Freddie Mac also increased fees on the following mortgage types:

• Loans that let borrowers pay interest in the initial years and defer principal payments
• Refinance loans that allow the borrower to cash out some of their home equity
• Loans with certain combinations of low credit scores and low down payments
• Condominium mortgages

The National Association of Realtors and the National Association of Home Builders have complained that these fee increases discourage home buying and mortgage refinancing when the housing market needs a boost.

Mortgage guidelines are constantly changing, so please consult with your lender well before you decide to purchase a home or refinace.  Contact Michael Zimmerman if you need a referral to a competent mortgage lender.

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