Interest Rates May be Low, but What about Future Costs?

Historically low interest rates are with us, but with a sluggish national economy and higher unemployment, some people just are not buying.  Enter the Federal Housing Finance Agency (FHFA), it seems that two major changes in housing financing are under consideration.

FHFA is the new regulator that is overseeing the restoration of viability of Fannie Mae and Freddie Mac. They are tasked with reducing the risk on loans delivered to the GSEs in order to protect the U.S. taxpayer.

In a speech, Mr. DeMarco of the FHFA, mentioned two potential changes:

Regulating fees

We know that the GSE’s charge fees.  And fees are fairly standard.  Mr. DeMarco is talking about increasing fees for areas that have proven to be more risky. This proposal means the hardest hit areas may have a most difficult time recovering because the increased fees typically get passed onto consumers.

The expected outcome of these policies is higher costs to the customer which makes buying a home more expensive. When home-buying costs go up, a borrower’s ability to be approved for a mortgage, goes down. 

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