Mortgage Market Minute: January 2012

Bank of America will halt originations of cash-out refinancings, citing what it calls a capacity problem. Source: National Mortgage News

On Dec. 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie Mae and Freddie Mac (Government Sponsored Agencies or GSEs) from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities. This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 needs to be greater than the average guarantee fees charged in 2011. The increase in the Guaranty Fee or "G-Fee" as it's called, equates to approximately a pricing difference of 50 basis points more in terms of costs or roughly 0.25% higher in rates.