HOME OWNERS GET SET TO PAY FOR PAYROLL TAX CUT
HERE IS THE SUBJECT OF AN EMAIL I GOT FROM ONE OF MY LENDERS TODAY:
Conforming and Non-conforming prices will change based on recent Congressional action, worsening pricing
"Freddie Mac and Fannie Mae are increasing their Guarantee Fee (GFee) effective with April “settlements,” which will worsen pricing. (As a result this lender is factoring the fee beginning in February)
- The GFee increase will worsen prices by up to 80 bps depending on note rate."
This is the fee being charged to Fannie/Freddie for the PAYROLL TAX CUT that was extended for two months.
Loan level price adjustments have become commonplace since the housing collapse. In the past if a borrower received an "approve/eligible" reading on automated underwriting and the home was a primary residence, and they were putting down at least 5%, there were no additional fees charged by Fannie/Freddie. Since the collapse there are fees depending upon loan to value and credit scores, among other features.
Suppose I have a borrower who has more than 40% equity, an 800 credit score he/she may not have to pay any fee currently.. . . . BUT
With the above change he/she will; they could pay the 80 bps out of pocket. (On a $100,000 loan this is only $80.00.) For some borrowers it would actually be financed into the rate with premium pricing. Unfortunately often it will be without knowledge of the borrower. Not every originator will break down the costs for the loan.
We in the industry knew this was coming when the announcement was made that the payroll tax cut was paid for by additional fees to Fannie/Freddie. While I agree the deficit is too high, I'm not sure I support one segment of our population paying for a payroll tax cut for everyone else. 
