A whack on the head, or the kick in the balls?

I'll take the kick in the balls!

And which will you choose Mr. & Mrs. Home buyers?
The whack on the head or the kick in the balls? How about both?


Just when you thought it couldn't’t get worse – it does.

When you thought that the mental defectives league on Capital Hill and their minions within the Beltway & On The Street couldn't’t possibly cause any more damage – they find a way.

When the entire housing market is teetering on the brink, when values are failing in what is rapidly becoming the double dip of the mother of all deflations, only this government could deliver a coup de gras – an insult to the intelligence, a mallet to the head – hell - I’ll call it what it is – a kick in the balls and call it anything other than a tax.

How about the whack in the head?

How? How about a new “fee“?

Be aware that the U.S. Treasury Department is considering a new mortgage fee to fund the backstops it gives for loans purchased through Fannie Mae and Freddie Mac.

Oh boy. Now you know why they left any reform of the mortgage giants out of the recent finreg bill. They had a sleeper in the wings.

Treasury analysts say the new “fee” may be up to 1.5 percent of the borrower's mortgage, which would be a big increase from the current 0.25 percent that both Fannie and Freddie currently charge mortgage borrowers. Plus, it remains to be seen if this new charge would be in addition to that current charge!

Why not two fees? Just call the original one an “origination fee” and the new one a “Mortgage Assurance fee” – or some other happy horseshit. Hey – don’t forget - once you have a new fee – you can always raise it! Hell – raise em both!

The Treasury also has under consideration breaking up Fannie and Freddie and selling pieces to the major banks, though most believe it will end up going with the fee. Hey – why not both!

So if you obtain a mortgage for $300,000 you could see an additional fee of up to $4,500 ... and the additional cost would just keep rising with the size of the loan.

How’s that for a reversal from the recently-expired home buyer credit!


Meanwhile, banks continue to significantly tighten their mortgage lending standards.

For instance, on June 1, Fannie Mae put into effect the Loan Quality Initiative (LQI), which requires lenders to pull two credit reports along with additional verification checks on potential borrowers.

That means even if you are initially approved for a loan, it can still be put on hold or cancelled altogether if you run-up credit card debts ... apply for other new loans of any kind ... or otherwise take actions that change your perceived risk profile before the mortgage actually closes.  Exactly what happens when people are trying to buy a house.
And it's worth noting that this initiative is mandatory — affecting practically every mortgage lender and secondary mortgage market product!

Therefore: (follow me here) This government, on one hand is now making it more expensive & harder to qualify for debt to buy something that on the other hand they say they want us all to buy despite the fact that this something is decreasing in value because,
there is so much of it on the market because
everyone is trying to dump it because,
it has become too expense to afford because,
there is already too much debt secured by it because,
the government wanted it to be cheap & easy to borrow because
they wanted a more egalitarian society by expanding property ownership, regardless the ability to pay.

Result, we are all poorer and hence more equal.
Guess the government got what it wanted.

How’s that for a kick in the balls?