WASHINGTON—The deal Congress hammered out to extend a payroll tax for two more months will mean increased costs to borrowers for government-backed mortgages.
The legislation (H.R. 3630) pays for the payroll measure by hiking guarantee fees on Fannie Mae and Freddie Mac loans by 10 basis points. Lenders will pay the extra points but, more than likely, will pass the cost onto borrowers, according to analysts.
H.R. 3630 also increases annual premiums on Federal Housing Administration single-family loans by 10 BPs. This corresponding hike is designed to ensure that FHA does not gain a competitive advantage and increase its market share via the GSEs, reported National Mortgage News, an affiliate of Credit Union Journal.
After a bitter fight over the two-month extension, congressional leaders reached a deal late last week, and will return to Washington in January to hammer out a full-year extension. Mortgage industry leaders are hoping lawmakers will look elsewhere for revenues to fund the next extension, National Mortgage News reported.
