WASHINGTON – Credit union executives are expected to hold more of their mortgages in portfolio after March 1, when Fannie Mae and Freddie Mac implement new surcharges on lower-rated borrowers.
“We’re going to start holding anything 15 years and more,” reported Jim Blaine, president of North Carolina State Employees CU, who said he doesn’t want to have to pass the surcharge on to his members. The $15 billion credit union plans to book all of its 20-, 25- and 30-year mortgages in house for the first time, starting today.
Starting March 1, both Fannie and Freddie will be charging lenders up to two points on mortgages with less than 30% down payment and a credit score under 620.
For scores between 620 and 639 the surcharge will be 1.75 points; 640 to 659 1.25 points, and between 660 and 679 it will be 0.75 points. The surcharges could add up to thousands of dollars for borrowers, who will have to pay the extra costs, either at settlement or as higher interest rates.
“With three-quarters of a percent to 1% of the loan, that adds up,” Blaine, told the Credit Union Journal yesterday.
