Changes.. They ARE happening in the mortgage business without question!  The most recent announcement from Fannie Mae and Freddie Mac is an important one.   In the last few months there has been a lot of mentioning the ‘Re-pricing of Risk’… Their announcement was about new ‘Delivery Fees’ that will be charged on loans purchased after March 1, 2008.   These changes are the outcome of Fannie Mae and Freddie Mac stepping back and looking at the risks associated with FICO scoring.

The new fees are strictly based on your FICO score.  Here is the breakdown:

·       Credit scores between 660-679: 0.750% of loan size in fees

·       Credit scores between 640-659: 1.250% of loan size in fees

·       Credit scores between 620-639: 1.750% of loan size in fees

·       Credit scores below 620: 2.000% of loan size in fees

Just for clarification, there are currently NO fees like this in place for either purchase or refinance transactions.

My main point of bringing this up is to show you how this will affect your bottom line when closing on a loan in the future.   Let’s say you have a 642 FICO score and you’re financing $200,000 on a new home purchase.   With the new additional ‘Delivery Fee’ you’ll have to pony up an additional $2,500 in closing costs to close the transaction.

In the future I do see this additional delivery fee potentially offset by opting to go with a higher interest rate.  This choice has not yet been announced, but seems likely (in my opinion).  This option would avoid the higher closing costs, but still cost consumers more money.

Also worth mentioning, there have been a couple recent changes with FICO scores – this adjustment is in addition to the adjustments in RATE that have already been implemented with numerous lenders. These ‘Delivery Fees’ are also in addition to the ‘Adverse Market Fee’ Fannie Mae announced earlier this month. 

Full disclosure: I’m not 100% sure when these fees will be passed onto consumers (It very well could be before March 2008).  My advice is to talk with your mortgage planner and see how these changes might effect your financing options, and then make your choice from there.   The only thing that is definite, is that the mortgage market continues to change.  Make sure you’re working with a professional that is staying on top of the news and can explain how it affects you!