Rates will rise
On December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Freddie Mac & Fannie Mae by no less than 10 basis points from the average guarantee fee charged by these companies in 2011 on single-family mortgage backed securities.
This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury rather that retained as reserves by Freddie Mac and Fannie Mae. This equates to anywhere from 40-75 bps worse in pricing.
Leonard Winslow
Direct: 434-760-2580
mailto:leonard.winslow@newamerican.com
web: www.newamerican.com/leonard.winslow
License #MLO-4817VA-NMLS #265272
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