Consumers soon will be paying more for government-backed mortgages now that the House and Senate have reached a deal extending a payroll tax break for two months.

The bill (HR 3630) pays for the payroll measure by raising 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 on to borrowers.

After a bitter fight over the two-month extension, congressional leaders reached a deal late Thursday. They 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.

HR 3630 also increases annual premiums on Federal Housing Administration single-family loans by 10 basis points.

This corresponding rise is designed to ensure the FHA goes not gain a competitive advantage and increase its market share via the government-sponsored enterprises.

Industry leaders were relieved to learn that the higher premiums will be used to bolster the FHA's undercapitalized mortgage insurance fund and will not be diverted to pay for other government programs or tax breaks.

In addition, the FHA can phase-in the 10-basis-point annual premium increase over two years. The agency now charges a 115-basis-point annual premium.

Congressional leaders were set to pass HR 3630 on Friday, sending the measure to President Obama for his signature.

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