Sorry to post a second message today, as i do not like to send out too many updates. That being said this is a major issue and it needs to be tackled as soon as possible. This letter is very well written and sums things up very well. Please call us with any questions:
On December 23, 2011, Congress and President Obama gave all homeowners and home buyers an ironic "present" in the form of a 10 bp increase in g-fees for all mortgage loan products offered by Fannie Mae and Freddie Mac, in order to fund a two-month extension of a 33% payroll tax cut. This shift in tax burden to homeowners and home buyers will remain in effect until October 2021 (a period of almost 10 years), and will cost this already stressed group of Americans approximately .45% of any amount they subsequently borrow to purchase a home, or refinance an existing home loan.
As you can imagine, I think this is an absurd and irresponsible way to finance a two-month tax cut, and I encourage everyone to protest loudly to any politician in your district or state. While there's little chance this law will be changed, it is nevertheless very important that we be heard, because this unprecedented use of credit guarantee fees for general Treasury purposes cannot be repeated. If Congress somehow begins to perceive credit guarantee fees to be some sort of readily available "cookie jar" that can be used for whatever whim politicians believe appropriate, then this country's housing finance system will be in a world of real hurt. The payroll tax extension will now expire on March 1, 2012; and you can be certain that efforts will be made to extend the tax cut through the November 2012 general election. If it costs 10 bps to fund an extension for two months, just imagine what it would do to guarantee fees if they were used to fund a full year!
Please see the attached announcement from the Federal Housing Finance Agency regarding this matter. It is very likely that this change in law will impact some lock-in expiration dates; we're now reviewing our pipeline and will be providing guidance soon regarding impacted loans, as well as when you might expect to see the cost of this increase reflected in our daily pricing.
Thank you for your business in 2011, and we look forward to expanding our mutually beneficial relationship in 2012!
Sincerely,
Jon K. Baymiller, CFA
President & CEO
NYCB Mortgage Company, LLC
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A mortgage company is, simply put, a company that finances property for its customers.
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