Monday, February 06, 2012

Obama Administration's Hidden Fee On Home Loans A Secret Tax Increase

President Obama has trumpeted the temporary payroll tax cut as his major victory for middle class Americans. Unfortunately, he isn't telling you about the massive screwing over homeowners are getting to pay for a few hundred dollars in savings.

Hidden in the bill that the president signed that came down from the Senate is a provision that adds a minimum monthly fee of one tenth of one percent per month for every $200,000 of the loan amount on every purchase or refinance - for the life of the loan.

For those of you whom are math challenged, for a $300,000 purchase or refinance loan, that amounts to $37.50 added on to your monthly payments...every year you have your loan:

The new fee is a minimum of one-tenth of 1 percent on Fannie Mae- and Freddie Mac-backed loans, and is likely to go much higher.

It will be imposed for the next 10 years on most mortgages and refinancings and it lasts for the life of the loan.

For every $200,000, it amounts to an extra $15 dollars a month.

It's bad news for Patty Anderson, who's buying a home in Virginia.

Anderson will save a couple hundred dollars from having her payroll tax cut extended but her mortgage broker told her the new fee would cost her almost $9,500.

"I was absolutely startled that it would add up to that much," she said.

The $35.7 billion collected in fees won't go into the Social Security fund to replace the lost payroll tax. It goes to the general treasury where Congress can spend it however they please.

Bill Burnett, Anderson's broker and president of the Virginia Association of Mortgage Brokers, said you won't see Congress' new charge in the paperwork, but it's there.

"It's actually built into this [interest] rate. You would never see the fee as a cost to you," he said. {...}

One congressman, Florida Republican Allen West, said he tried to blow the whistle on the whole thing before Christmas.

"I read the legislation and raised the flag. Unfortunately nobody paid attention to what I was saying at the time," he said, calling the fee a backdoor tax increase on the middle class.

"It absolutely is because you're talking about the homeowners - when you're talking about the people that are gonna be using the Fannie Mae, the Freddie Mac, the government-sponsored enterprises - it is absolutely a tax increase on them."

An Obama administration official defended the mortgage fee, calling it "modest." She said it's "unlikely to negatively affect borrowers" because increases "will be phased in over the next two years." And it will "help bring private capital back into the mortgage market, which [is] good for borrowers over the long term."

Except it isn't going into 'private capital' but right into Congress's general fund.Hey,what one more lie at this point?

$9,500 in new taxes in exchange for a couple of hundred dollars in tax relief for two months. This is what President Obama and the Democrats mean by 'new revenues'. And it's exactly what the GOP presidential candidates ought to be screaming bloody murder about.


louielouie said...

only reading about this as ff posted it, i don't see any mention of action in the house, which i thought was republican majority.
as the comment made by col. west, why was no one paying any attention.
boehner needs to go.

Rob said...

Actually, if you read the linked article, Boehner is blaming it entirely on the Senate.

What likely happened is that Col. West and a couple of others pointed out what was going on and were told 'Shush! You want to bring government to standstill and have us get blamed?'

I agree, Boehner's not much of a leader.