Payroll Tax Cut Paid for with Higher Mortgage Rates

The Temporary Payroll Tax Cut Continuation Act of 2011 was signed into law earlier this month. At the time it was passed we knew it was going to be financed with higher guaranty fees from Fannie Mae & Freddit Mac. These G-Fees are built into the price or interest rate of a new home loan. Today, Fannie Mae announced that they are raising their G-Fees by 10 basis points (0.1%) beginning April 1.

What this means for those looking to finance the purchase of a home, or refinancing, is that they will pay about 0.1% higher in interest rate than they otherwise would have. Lenders' rates will be impacted a couple months in advance of the April 1 start date.

So a payroll tax cut is paid for by what amounts to a mortgage tax for new homeowners and those that refinance their existing home loans.

Too Difficult to do Mortgages in Massachusetts

I just received this notice from GMAC who is one of the investors that we sell mortgages to.

"GMAC Bank (GMACB) Correspondent Funding Approved Correspondent Clients
please note that effective Tuesday, December 6, 2011, GMACB will no longer
accept new locks for properties located in the Commonwealth of Massachusetts.
This change is necessary due to the complexity of transacting business in an
increasingly difficult legal environment in Massachusetts."

Politicians in Massachusetts and other states need to understand that overly burdensome legislation and regulation on banks and mortgage companies will ultimately hurt the people for whom they are there to serve.