January 9, 2012:
On December 23rd, 2011, President Obama signed legislation extending the payroll tax reduction and requiring the Federal Housing Finance Agency (FHFA, the conservator of Fannie Mae and Freddie Mac (the GSEs)) to raise GSE guarantee fees (g-fees) by at least ten basis points. In addition, the new law requires The Department of Housing and Urban Development (HUD) to establish and collect annual premiums, in addition to existing premiums, of ten basis points of the unpaid principal balance on all FHA loans. Despite NAR's strong opposition to the diversion of housing resources to pay for non-housing uses, the increase in g-fees is being used to pay for the extensions. HUD is required to phase in the increase over two years, as it determines appropriate, and will use the premium increase to shore up the FHA insurance fund. FHFA has directed Fannie Mae and Freddie Mac to increase their guarantee fees effective April 1, 2012. The increases will remain in effect through September 30, 2021. Lenders who choose to pass this increase on to borrowers will likely increase the rate offered to a borrower by .1% sometime before April 1, 2012. Several sources have placed the increase in cost at approximately $4000 - $5400 over 30 years on a $200,000 loan. On a monthly basis, the increase will amount to an approximately $11-15 increase.