The G-fee Hit

Written By: Bonnie Wilt-Hild

As if we didn’t already pay enough in the way of taxes, beginning January 16, 2012 we will have another to contend with, that being the G-fee hit ordered by Congress and the FHFA with respect to pricing adjustments. For those of you who are not aware of what this means for you as lenders, begin checking out the rate sheets from your investors next week and you will quickly realize that this equates to an approximate increase in pricing of .50 basis points on most all conforming conventional (including high balance) loans. The additional fees will impact 45 and 60 pricing for these loan types and will gradually be phased in through April, 2012. Think about it, for a $100,000 loan, you are now dealing with an increase in cost of about $500.00.

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So what is it all about you ask? Very simple, due to the payroll tax cut extension just passed by Congress, our fine government has lost 33 billion dollars in revenue, so they have decided to recoup this loss in the mortgage market place which I would like to remind you is still struggling from the 2007-2008 implosion. After 5 years of listening to our legislators discuss how to stabilize the housing market, the implementation of Dodd-Frank, which of course costs lenders millions to comply with, you really have to wonder what everyone is thinking when they decide increasing the cost of homeownership is a smart move. In a market where credit standards are stringent and even the most qualified borrower is at risk of being declined when applying for a mortgage loan, where millions of Americans are either unemployed or have become re-employed in positions earning less money than they have in the past and taxes on other critical products such as gasoline and fuel have increase dramatically, why on earth would someone think increasing the cost of financing where homeownership is concerned is a good idea? As things have become more transparent for borrowers (allegedly) under RESPA reform, lenders will now be required to indicate increased charges under “Our Origination Charge” making it appear that borrowers are now being charged significantly higher lender fees, when in truth, it’s not a lender fee at all. We should be able to disclose it in box 3 under “fees paid to others” and list it payable to the FHFA/Congress! Further the increased cost of financing in additional to the overall cost of homeownership may put it out of reach for many low to moderate income borrowers, further stalling the recovery of the housing market.

I want to say that in general I think there are already enough taxes related to homeownership, be that during the purchase phase and cost to finance as well as the taxes levied on homeowners in general. Think about it for a minute, in order to purchase a home, one is subject to Recordation taxes, Documentary Stamps as well as state and federal transfer taxes, all of this combined accounting for about 3% of the borrowers overall closing costs. Get a little more redundant still and consider that most sellers split these fees with buyers so you are actually paying them when you buy and when you sell. If that is not enough, if you sell your property and decide not to purchase a new one because you don’t feel that you can afford the real estate property taxes imposed each year by our state government, then the federal government will charge you a capital gains tax on any profit that resulted from the sale and if you were simply unfortunate enough to inherit the property, well you are going to have to pay an inheritance tax as well. This in addition to your income taxes, taxes on goods and services, license fees, excises, poll taxes, sales tax, consumption taxes, environmental tax and I would like to say wealth taxes but after paying all of the other taxes, you won’t have any money left so you shouldn’t be subject to that one and while the average American may not be able to afford financing anymore, they will at least save some money as they won’t have property or utility taxes to worry about.

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Rant finished and in closing I will say make sure your origination staff particularly is aware of this one and post closers, don’t delay in getting the files to your investors because of course these fees effect lock extensions, in short if you don’t get the file there in a timely fashion, your earnings could be .50% less and of course you will need this income to cover income taxes. As far as updating your provider of service addendum to include FHFA, don’t worry about it, like I said it all falls under “Our Origination Charge”. Have a great week all.

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University ( as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at:

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