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as details emerge on the 'tax cut for the 99%ers' disguised as a social security shortfall . . . 
"To pay for the two-month payroll tax cut, a small fee will be levied for a decade on all mortgages sold to Fannie Mae and Freddie Mac. That also makes it harder to overhaul the housing finance system."
Reporting from Washington—
The new mortgage fee to fund the temporary extension of the payroll tax cut could damp the still-sluggish real estate market and complicate efforts to overhaul the nation's wounded housing finance system.
Even though the tax cut approved Friday extends for only two months, a small fee on loan amounts will be levied for a decade on all mortgages sold to housing finance giants Fannie Mae and Freddie Mac, which control about 60% of the nation's mortgage market.
That fee arrangement also makes it difficult for Congress to work on efforts to shut down Fannie and Freddie, which federal regulators seized three years ago with a taxpayer bailout now estimated to total about $150 billion.
Based on prevailing rates for a 30-year fixed-rate loan, a homeowner borrowing $200,000 would pay about $4,000 more if the loan were sold to Fannie or Freddie. That would raise the mortgage payment about $11 a month for the life of the loan.
The fee may make a new loan unaffordable for some people, but the effect probably would be modest, said banking analyst Bert Ely of Alexandria, Va. The bigger effect will be on the government's ability to overhaul the housing finance system, which most analysts said is needed.
"This really complicates what you do with Fannie and Freddie down the road," Ely said.
The Obama administration and some analysts have called for Fannie Mae and Freddie Mac to raise their fees to make it easier for private companies to compete with them. Because Fannie and Freddie are owned by the government, investors view the mortgage-backed securities they create as safer investments than those offered by private firms.
This month, the mortgage bankers group joined with the National Assn. of Home Builders and the National Assn. of Realtors in urging lawmakers not to use the fee to pay for the extension package.
Edward DeMarco, the acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, also raised concerns.
He said the government reliance on long-term revenue from the firms seemed inconsistent with the need to end the conservatorship and overhaul the housing finance system.
The agency did not comment on the legislation, which President Obama quickly signed Friday.
The housing finance agency will announce soon when it will implement the fee, spokeswoman Corinne Russell said. The law allows the agency to phase in the fee over two years.
http://www.latimes.com/business/real...,6170696.story
time for me to bid Adios . . .
"To pay for the two-month payroll tax cut, a small fee will be levied for a decade on all mortgages sold to Fannie Mae and Freddie Mac. That also makes it harder to overhaul the housing finance system."
Reporting from Washington—
The new mortgage fee to fund the temporary extension of the payroll tax cut could damp the still-sluggish real estate market and complicate efforts to overhaul the nation's wounded housing finance system.
Even though the tax cut approved Friday extends for only two months, a small fee on loan amounts will be levied for a decade on all mortgages sold to housing finance giants Fannie Mae and Freddie Mac, which control about 60% of the nation's mortgage market.
That fee arrangement also makes it difficult for Congress to work on efforts to shut down Fannie and Freddie, which federal regulators seized three years ago with a taxpayer bailout now estimated to total about $150 billion.
Based on prevailing rates for a 30-year fixed-rate loan, a homeowner borrowing $200,000 would pay about $4,000 more if the loan were sold to Fannie or Freddie. That would raise the mortgage payment about $11 a month for the life of the loan.
The fee may make a new loan unaffordable for some people, but the effect probably would be modest, said banking analyst Bert Ely of Alexandria, Va. The bigger effect will be on the government's ability to overhaul the housing finance system, which most analysts said is needed.
"This really complicates what you do with Fannie and Freddie down the road," Ely said.
The Obama administration and some analysts have called for Fannie Mae and Freddie Mac to raise their fees to make it easier for private companies to compete with them. Because Fannie and Freddie are owned by the government, investors view the mortgage-backed securities they create as safer investments than those offered by private firms.
This month, the mortgage bankers group joined with the National Assn. of Home Builders and the National Assn. of Realtors in urging lawmakers not to use the fee to pay for the extension package.
Edward DeMarco, the acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, also raised concerns.
He said the government reliance on long-term revenue from the firms seemed inconsistent with the need to end the conservatorship and overhaul the housing finance system.
The agency did not comment on the legislation, which President Obama quickly signed Friday.
The housing finance agency will announce soon when it will implement the fee, spokeswoman Corinne Russell said. The law allows the agency to phase in the fee over two years.
http://www.latimes.com/business/real...,6170696.story
time for me to bid Adios . . .
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