New Fees From Fannie Mae, Freddie Mac Bite Borrowers

The mortgage crisis is about to take another bite out of my family's finances.

It's bad enough that we got squeezed out of the housing market as property values soared, only to get stuck with a home that's valued far lower than what we paid for it once the bubble burst.

Now we're being forced to foot part of the bill for the cleanup, even though we have plenty of equity in our home and never miss a payment.

Fannie MaeFNM and Freddie MacFRE are imposing a new, up-front fee of 0.25% on all of the mortgages they buy or guarantee -- regardless of the credit quality of the borrower. On a mortgage of $417,000, which is the biggest that Fannie and Freddie can buy, that would mean an additional $1,042.50.

It's certain to be passed along to consumers like my husband and me. In early 2005 -- at the top of the market -- we bought a two-bedroom, one-and-a-half bathroom house in Maplewood, N.J. It was a 96-year-old fixer upper.

Nearly three years later, we have invested at least 20% of the purchase price in repairs and restoration. But given the number of for-sale signs dotting the neighborhood, I seriously doubt we could get what we originally paid for it, even after the improvements.

Last year my husband was entertaining a job offer halfway across the country in St. Louis. The prospect of moving to a less-expensive city was appealing, but we quickly realized we might have to take a loss on our house to do it.

Now, if either of us wanted to take a job in another part of the country, we wouldn't just have to take a loss on our house, we'd also likely get hit with an additional fee when we take out the new mortgage.

In fact, we'd probably have to pay the fee even if we want to refinance our 10-year adjustable-rate mortgage. At this point, that seems the more likely scenario, as it doesn't look like we're going anywhere soon.

Fannie and Freddie are government-sponsored agencies that buy mortgages from lenders and guarantee the payments so they can be sold again to investors. The two companies have already added surcharges on loans to people who have less-than-perfect credit and are taking on excessive debt. But after all, those are the kinds of loans that are having problems.

In a statement, Fannie said the new fee is needed "to ensure that what we charge aligns with the risk we bear."

Freddie's statement says its fee will allow the company "to continue fulfilling our important housing mission in the current market environment."

But I'm inclined to agree with the National Association of Home Builders, which says the fee is "a broad tax on homeownership."

How is the housing market going to recover when the cost of a mortgage keeps rising?

Obviously, nobody should feel sorry for us. There are a lot of people who have been hit harder by the mortgage crisis. My point is that no matter how prudent you may have been, you're going to get stuck with this new fee. Even if you rented throughout the housing boom and are cheering now that price have finally come down, it's going to cost you more to get a mortgage.

I don't know how many of our neighbors have put their homes up for sale because they stretched their finances too far. But I don't like to think that we're on the hook for the ones who have.

Mortgage Rates in Selected Cities
City	Term	Rate
Boston	30-year fixed	6.125%
New York	30-year fixed	6.0%
Miami	30-year fixed	6.125%
Chicago	30-year fixed	5.875%
Minneapolis	30-year fixed	6.0%
Source: BankingMyWay.com --no origination fee / 20% down payment / excludes Internet banks / excludes credit unions / loans under $417,000 For more rates, see BankingMyWay.com