Tuesday, March 17, 2009

More on Adverse Delivery fees !

Okay, I have researched these "adverse delivery fees" -reviewing a number of websites that provide information on the matter. In a nut shell this is what I have discovered:

Fannie and Freddie, which are government-sponsored enterprises, or GSEs, collect guarantee fees on bundles of loans that they securitize. In exchange, the GSEs make sure that the investors are paid, even if the borrowers miss payments. Thus, guarantee fees act like insurance. Guarantee fees are going up in reaction to this year's turmoil in the mortgage business, just as auto premiums increase after a claim.

Everyone getting a mortgage securitized by Fannie and Freddie -- and that's probably a majority of home loans nowadays -- will pay a fee of a quarter point, or $250 for each $100,000 borrowed. Fannie calls it an "adverse market delivery charge" and Freddie calls it a "market condition delivery fee" that it is imposing "due to continued deterioration in the mortgage market."

Mortgage professionals don't believe the fees are solely about risk. They suspect it's also about market power. Before this year's mortgage meltdown, Fannie and Freddie had a lot of competition in the business of securitizing mortgages. Much of that competition has evaporated, leaving Fannie and Freddie free to add fees, and there's little that lenders and brokers can do about it.

Main Street Solution:

1)Discover who approved these fees.

2)How is it that a government sponsored enterprise, that is an enterprise that is sponsored by we the taxpayers, believes it right/fair to charge these fees?

3) Discover to whom one can write in order to voice an objection to these fees.

We must stand together on Main Street!

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