MOBILE, Alabama -- Local lenders say consumers will take a hit given the Obama administration's planned reforms in housing finance.
Federal officials want to phase out government-sponsored lenders Fannie Mae and Freddie Mac by increasing costs in those program to the same level as their private counterparts over the next several years.
For example, required down payments would rise, over time, from the current 3.5 percent to 10 percent.
Beginning April 18, the Department of Housing and Urban Development will increase the annual mortgage insurance premium by 25 basis points. The increase will raise the yearly premium to 115 basis points on Federal Housing Administration-insured, single-family loans with loan-to-value ratios greater than 95 percent. Lenders say it will be close to the monthly PMI cost on most conventional loans.
"The overall view of what we're seeing is that it will drive costs up for the consumer," said Sharon Thompson of SWBC Mortgage Corp. in Mobile.
It's already a challenge for buyers to get financing, she said, because lenders are tightening their guidelines.
"It's all an attempt to raise fees to help the government," said Ken Cramton of MortgageAmerica in Fairhope.
Cramton said that he's not convinced, however, that the changes will kill FHA financing.
"It's still a viable program and still affords people a chance to get financing that otherwise could not," he said. "There are other ways for the government to raise fees. I see this as a short term fix."