Obama Promises Lower Mortgage Costs, New Loans

Obama Promises Lower Mortgage Costs, New Loans
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WASHINGTON -- President Barack Obama on Saturday promised to
lower mortgage costs, offer job-creating loans for small businesses, get
credit flowing and rein in free-spending executives as he readies a new road map for spending billions from the second installment of the financial rescue plan.

The White House is deciding how to structure the remaining half of the
$700 billion that Congress approved last year to save financial institutions and lenders. An announcement was possible as early as this coming week on an approach that would use a range of tools to unfreeze credit, helping families and businesses.

At the end of a week that saw hundreds of thousands of people lose their jobs, Mr. Obama also used his Saturday radio and Internet address to tell that nation that "no one bill, no matter how comprehensive, can
cure what ails our economy."

During the final three months of 2008, the economy recorded its worst
downhill slide in a quarter-century, stumbling backward at a 3.8% pace, the government reported Friday. It could get worse.

Treasury Secretary Timothy Geithner is trying to finish a plan to overhaul the bailout program begun in the Bush administration. Mr. Geithner has said the administration is considering using a government-run "bad bank" to buy up financial institutions' bad assets. But some officials now say that option is gone because of potential costs.
Many ideas under consideration could end up costing hundreds of billions beyond the original price tag. Aides would not rule out the possibility that the administration would seek more than the $350 billion already set aside.

I've got a few ideas to immediately lower mortgage costs, and it wouldn't cost the government a dime. Ideas that could be implemented within days:

Roll back the excessive hidden fees (also known as pricing adjustments) that Fannie Mae and Freddie Mac have dramatically increased over the past 18 months.

Examples of hidden fees:

• FICO (Credit Score) Adjustments (Fannie Mae). For a 30 year Fixed mortgage with an LTV between 75.01% and 80% the pricing adjustment is as follows:

Roll back the FICO adjustments to the 700 level, and cut the adjustments below 700 in half.

• Adverse Market Delivery Charge - 0.250% To Price, 0.125% to Rate. This charge is exceptionally counter-productive given that the Federal Reserve is pulling out all the stops to reduce mortgage rates, not raise them.

I could go on, but the list of new and/or increased charges from Fannie Mae/Freddie Mac is simply astonishing. Cut these fees immediately, and you've got much lower interest rates for the consumer. This is something that could be enacted within days.