For the first since the dotcom era, the words "March First" will be associated with excess and speculation.

Effective March 1, 2008, conforming mortgages will carry new fees designed to shield Fannie Mae from further weakness in the housing sector.  This news comes from Fannie Mae's lender-specific Web site.

The site carries an announcement titled "Adverse Market Delivery Charge".  In it, Fannie Mae announces that a 0.250% fee will apply to all loans that it guarantees, effective March 1, 2008.

To everyday people, that means that for every $100,000 borrowed on a mortgage, an additional $250 cost will be tacked onto the loan, due at closing.  Alternatively, a borrower can choose to pay the "Adverse Market" fee indirectly by accepting a higher interest rate that "finances the cost in".

For active home buyers and home sellers, this is one reason why closing prior to March 1, 2008 may be smart -- it's a money saver.

But, there are other reasons, too. 

Look closely at the 2007 Lender Announcements page and you'll find a PDF titled "New Flow Business Pricing Requirements".  That document details how Fannie Mae is adding a credit score-based fee on the majority of its loan products.  That fee also goes into effect March 1, 2008.

Or, look at "Maximum Financing In Declining Markets".  That document states that if real estate is depreciating somewhere, the maximum available financing will be cut by five percent.  Instead of making a minimum 5% downpayment, therefore, a home buyer may have to increase that percentage to ten.

Financing real estate is getting tougher, and more expensive.

In the Inman TV interview, I talked about why "now is a good time to buy", stressing changes in the mortgage industry as opposed to market conditions for real estate.  The items above are the exact "corners getting cut" that I was talking about.

Author's Note: Freddie Mac is following suit and will implement the same risk-based fees and adjustments as its sister company Fannie Mae.

---

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.