Local Real Estate Comments and Ramblings


Mortgage Fees Would Rise Under Payroll Tax Cut Deal

Wow!  I now have 2 big issues with the current "tax cut" proposal.  Previously I was opposed because it merely kicked the can for two months.  It should be for 1 year or more.  Now it turns out they were going to fund it with added fees on mortgages.  So a two month tax cut costs homeowners for up to 30 years!!!!

Mortgage Fees Would Rise Under Payroll Tax Cut Deal


If you're a real estate agent, a real estate broker, a loan officer, a home buyer or a home owner,


Congress has done it again.  The government has targeted one group of Americans to benefit another.  This is what Congress calls "paid for" when they design legislation to benefit one group of voters and sticks their hands in the pockets of another group to "pay for it".  In most cases of course, the group to benefit are expected to vote for the politician(s) who sponsor the legislation.  In this case it's an extension of the so called "payroll tax cut".  This is not a "payroll tax cut".  Never was and never will be.  It is a clear reduction in the withholding for FICA contribution to fund Social Security benefit recipients.  Of course, as usual, the benefit is immediate and the "pay" for it will be a charge to American home owners and buyer for the next ten years.  Have we ever seen Congress buy any votes by cutting one single $Dollar of spending???  Help me out.  I can't think of one.  What they propose today will be paid for by new fees on some group of Americans long into the future.  Even when Congress "reduces" an expenditure, it's only a reduction in the "rate of growth", not a cut as they cleverly claim. 

In this case, the reduction in FICA withholding is "paid for" by gouging home owners and home buyers and it will last FOR THE LIFE OF THE LOAN.


"In exchange for a two-month tax cut, the Senate on Saturday approved a permanent increase in fees attached to mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA)."


The fee amounts to about $360 per household per year for an average $200,000 mortgage.  How much money will this hit on home owners and home buyers raise??  About $37,000,000,000.  Of course, that will extrapolate to $720 per household with a $400,000 mortgage.  That's a lot of $Billions and that's a lot of households.  $37,000,000,000 represents $Thirty Seven Thousand Million.  It represents a fee to every single home buyer who finances their new home purchase with a loan purchased or insured by Fannie Mae, Freddie Mac or the Federal Housing Administration, or about 90% of ALL newly originated or refinanced loans.

$37,000,000,000 is a lot of money and the saddest thing about the entire matter is that it funds the reduction in the FICA withholding for only TWO MONTHS. 

If Congress succeeds in passing legislation to reduce the FICA withholding for a year, which is the goal of many today, where will they get the money to PAY FOR that????

I GIVE UP!!  What I do know is that anyone involved in the housing industry, every home owner who may wish to refinance their home loan and every future home buyer for years HAS A TARGET ON THEIR BACKS!!

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.


BTW, the "tag" for this post is "mortgage mess", now up to 245 posts with this one.  Why do I have a compendium of posts with the tag of mortgage mess??  Because, IMO, the "mortgage mess" was caused by, created by and exacerbated by actions of the U.S. Congress. 


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Bob Southard
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Comment balloon 0 commentsBob Southard • December 20 2011 10:07AM


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