Freddie Mac increasing fees to lenders for backing risky mortgages
11/23/2010
By Credit.com Staff
The changes will raise upfront fees to lenders by as much as 0.75 percent of the total loan balance, and will also add costs for consumers who are using additional home loans as part of the amount they borrow, according to a report from Freddie Mac. The mortgage giant says its new rules will go into effect March 1.
"The changes help to ensure that we are adequately compensated for the continued provision of essential liquidity to the mortgage market, and are able to continue our support for affordable lending while being diligent stewards of taxpayer funding," Patricia McClung, vice president of offerings management at Freddie Mac, said in a memo.
Some worry that the added fees will keep the housing market stagnant, as lenders could offset the upfront charges by increasing rates on loans, which will then make monthly payments slightly higher, the report said.
The housing market has remained stagnant in recent months thanks to slow economic recovery and elevated unemployment rates.
