St. Louis Post-Dispatch Jim Gallagher column

Source: St.迷你倉 Louis Post-DispatchDec. 22--Mortgages will be more expensive and harder to get next year. You can blame -- or thank -- Uncle Sam for that.Why would you thank him? Because he's trying to avoid another housing price crash and big bank bailout far in the future.The government may hit home borrowers with a triple whammy.Whammy No. 1 unfolded last week. The Federal Housing Finance Agency forced Fannie Mae and Freddie Mac to raise the fees they charge to guarantee mortgages. Those new fees would be passed on to consumers beginning early next year.On Friday night, however, the incoming head of the regulatory agency postponed the fee hike, according to the Wall Street Journal. Mel Watt, who takes office next month, said he wants to "evaluate fully the rationale for the plan."If he OKs it, new borrowers will feel the pain. "A homebuyer with a 720-739 score who borrows $200,000 and puts down 10 percent faces a whopping 1.25 percent increase ($2,500), and that's just in the upfront fees," said Ted Rood of Wintrust Mortgage in Creve Coeur.Such fees are normally rolled into the interest rate rather than paid upfront. The change -- combined with a second, smaller new fee -- might add about 0.36 percent to the interest rate a consumer pays on that loan, Rood said. The actual amount will vary with a loan's particulars.The fees would vary with credit score and the down payment amount. In general, the government hit hardest at people in the middle credit score range -- from 700 to 759 -- and with down payments under 20 percent.Why is Uncle Sam being a meanie? In part, it's because Fannie and Freddie guarantee the vast majority of mortgages, and the government-controlled agencies needed a massive federal bailout five years ago.The government would rather not go through that again. By raising the cost of Fannie and Freddie-backed loans, it encourages a private loan market to develop. That market already exists for "jumbo" loans over $417,000, which Fannie and Freddie don't back in St. Louis. Getting a market going for smaller loans would help ease the government away from the mortgage-guarantee business.The higher fee would also make Fannie and Freddie more solvent should bad times come again.Whammy No. 2 involves loan safety, and also fairness to borrowers. So-called Qualified Mortgage rules kick in Jself storagen. 10. Lenders who don't follow the rules can find themselves sued by borrowers, who can claim they were given a loan they couldn't really afford.Some parts are clearly pro-consumer. For instance, upfront fees will be limited to 3 percent of the loan amount on most mortgages, with a slightly higher limit for smaller loans. That will reduce the junk fees that some nasty lenders tack on to closing costs.But the government also wants lenders to be meticulous in verifying a borrower's employment, income and other debts. That means "more questions, more paperwork, more scrutiny" for borrowers, said Ruth Battle, senior vice president at Paramount Mortgage in Creve Coeur.The government is decreeing that all consumer debt payments can take up no more than 43 percent of income. Balloon loans, interest-only and negative amortization mortgages are ruled out.All that is an effort to make sure that homebuyers can actually make their payments, a process that went loosey-goosey before the housing bubble burst.There's an exemption from the income requirement for loans that Fannie, Freddie and the FHA will take, and that's a huge loophole. Fannie and Freddie are a little more lenient with income limits, but there is thought that many lenders will stick to the 43 percent rule rather than risk claiming the loophole.The bottom line: "There are going to be good people that qualify today that won't qualify a month from now," Battle said.Some lenders aren't happy with that. "They're taking the art away from the business," said George DeMare of Midwest Mortgage in west St. Louis County. That art involves judging a person's character to make a loan to someone who doesn't quite fit the guidelines.Whammy No. 3 comes from the Federal Reserve. The Fed has been buying mortgage and Treasury bonds to the tune of $85 billion a month in order to hold long-term interest rates down. Last week, it began to slowly reduce its buying.That, plus a recovering economy, could mean somewhat higher mortgage rates through next year.All of this is rotten news for people buying, selling or building houses. But a recovering economy also puts more money in people's pockets. Maybe it will balance out.Copyright: ___ (c)2013 St. Louis Post-Dispatch Visit the St. Louis Post-Dispatch at .stltoday.com Distributed by MCT Information Services迷利倉