Congress passed a $150 billion bill that extends the payroll tax reduction and unemployment benefits for ten months without increasing the guarantee fees (g-fees) on Fannie Mae and Freddie Mac. Consideration was at first given to raising the fees as a means to pay for the extension but then dropped. In December Congress passed a ten basis point hike in g-fees to cover the cost of a two-month extension of benefits, and this increase in bps is permanent. As a result, Fannie and Freddie will pass that expense on and it will increase what borrowers pay. NationalMortgageNews tells MHProNews.com mortgage trade groups have told Congress they would like to use the fees to increase the liquidity of the secondary mortgage market, but oppose using g-fees to fund other government programs.
(Photo credit: moneycontrol)