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Lender fees to be passed on to borrowers

FILE - In this Nov. 10, 2010 file

FILE - In this Nov. 10, 2010 file photo, the new Fannie Mae Mortgage Help logo is seen in Culver City, Calif. Freddie Mac said Thursday the average rate on the 30-year mortgage dropped to 4.77 percent from 4.86 percent the previous week. It hit a 40-year low of 4.17 percent in November. (AP Photo/Damian Dovarganes, File) Photo Credit: AP Photo/Damian Dovarganes

Fannie Mae is scheduled to raise lender fees for loans delivered to the government-sponsored enterprise starting April 1, and lenders are expected to pass on those costs to borrowers starting next month, according to Lending Tree, an online mortgage marketplace.

Lending Tree chief economist Cameron Findlay advises borrowers to shop around for the best rate and then lock it in quickly, since some lenders may choose to raise rates sooner than others.

But don’t panic, says Mike McHugh, president of Melville-based Continental Home Loans.

“You’re not talking about significant increases,” he says, adding that volatility in the market will be a bigger factor in mortgage rates than the scheduled fee hike.

"Fee increases are different than rate increases," says Alan Rosenbaum, a Port Washington resident and the chief executive of Guardhill Financial Corp. in Manhattan. The fee Fannie Mae will charge lenders will depend on the loan to value ratio. For instance, "with combined loan values over 80 percent, on a $400,000 loan it will be a $1,000 fee," says Rosenbaum.

But that entire cost won't necessarily be passed on to individuals -- borrowers can expect lenders to build in an eighth of a percent increase, McHugh says.

“It does affect your payments, but more so than that is the timing of the market. We had huge rate swings between November and December, and we’re still seeing some of that now, with mixed messages on the economic front.”

Rosenbaum agrees that a number of factors, including the improving stock market and expected inflation, will drive interest rates up this year, making now a good time to lock in. “I would say the combination, between higher mortgage rates and the additional fees, should motivate people to refinance now rather than wait till later,” says Rosenbaum. “If you want to lock in a refinance rate, now is the time to do it, because we see the rates starting to move. I wouldn’t panic, but I certainly wouldn’t procrastinate either."

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