The mortgage market has been a unique one as of late. I’ve been saying for the last year that lenders are currently re-pricing risk across the board, almost as if their looking over the ledge and backing away to stay in business. The reality is that lending guidelines became very lenient and default rates went through the roof and lenders lost a lot more money than they planned on loosing. Obviously when lenders are going out of business left and right something has to change.
Recently, large mortgage purchaser Fannie Mae made an announcement of an ‘Adverse Market Delivery Charge’. This is a new fee that will apply to mortgages that are purchased on or after March 1st, 2008.
My prediction is that this ‘fee’ will be administered in one of two ways:
- .25% Charge up front (with a $200,000 loan, there will be an additional $500 in closing costs)
- A slightly higher interest rate (not yet determined or announced, but likely to cost .125 in rate)
A bummer? Yes. Do we have any other choice? Not really.
My advice to you: If you’re on the fence on purchasing or refinancing a home, try to come off of it. Costs are likely to continue to increase as lenders continue to re-price the risk on the loans they will continue to fund.
