Effective April 1, Fannie Mae and Freddie Mac will be toughening rules on credit scores and down payment. As a result, many major lenders are already factoring in the higher fees, which will reduce the effectiveness of the stimulus efforts.
- Buyers with down payments of less than 25% will be charged a ¾ point add-on penalty no matter how high their credit score
- Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a 1% add-on
- Refinancers who take cash out will be charged as much as 3 points if they have a low to moderate equity stake
A spokesman for Freddie Mac says the loan categories and credit risk combinations targeted by these fees can default at four to eight times the rate of other mortgages backed by Freddie Mac. “We have to manage these risks appropriately,” the spokesman added.