What Payroll Reduction? Homebuyers to Pay the Cost

When President Obama signed into law the Temporary Payroll Tax Cut Continuation Act he put the cost of the reduced payroll tax cut on homebuyers by increasing the guarantee fees on new mortgages.

The amount of the guarantee fee increases will be included in future mortgage rates. In the past all guarantee fees collected by the agencies were held in separate guarantee pools. The increased fee will go straight to the General Fund. Several elements in the bill are not quite clear and may take weeks or months to determine.

The primary questions are:

1. How much will the Fannie and Freddie g-fee rise? The Act calls for a minimum increase of 10 basis points, but the amount of the increase is to be determined by FHFA. The early expectation from insiders is that the increase will be 10 basis points. An enactment date hasn’t been determined yet.

2. Will the increase in guarantee fees hit all at once? The Act says the FHFA may phase in the increase over a two-year period. This could make the initial effect on mortgage rates fairly small. However, the FHFA could make the increase applicable all at once.

3. How much will the FHA’s annual insurance premium increase? This is the easy one. The answer is 10 basis points. Date of enactment is not clear.

Everyone knows the housing industry carries the economy into and out of a recession. Why is it that the one thing that can boost the economy the quickest is being burden with too many regulations and additional fees?

The other sad part is the American public thinks they really got a tax reduction. So much for transparency

A Little Humor Regarding The RESPA Changes

This poem is making the rounds in the mortgage and title communities. Enjoy and best wishes for a happy and prosperous new year!

T’was the week before New Year’s

When all through the lands,

LO’s and Closers were wringing their hands.

RESPA changes are coming,

They all started to worry,

We’d better get trained, and get trained in a hurry!

We all kept on hoping

There would be a delay.

But HUD said, “No Way,” it’s all here to stay.

“We love our new HUD

And our new GFE,

Don’t fret, don’t worry, it’s as simple as can be.”

We all shook our heads,

Threw our hands to the sky.

What were you drinking? You must have been high!

You took a one page doc

And changed it to three.

Easier? More simple? How can that be?

The Regs don’t match up,

So now what do we do?

HUD says, “No comment, It’s all up to you.”

No info on TILA,

HMDA, REG B.

We are totally confused, why can’t they see??

In a time when some borrowers

Think lenders are scary,

You’ve given 3 pages to make them more wary.

This doesn’t make sense,

Not one little bit.

We are all trying hard to not throw a fit.

So we will all do our best

To put borrowers at ease.

But make more reform, please, please, please!

Please bring someone in

Who knows just what to do.

What is best for both borrowers AND lenders too.

We are all still waiting,

Though not holding our breath

And hoping the government doesn’t “Reg” us to death.

So, on this week before New Year’s,

I’d like to wish you

Good luck with RESPA, I need it too!