WASHINGTON -- It's not what homebuyers, sellers and refinancers want to hear, but they need to know: Both Fannie Mae and Freddie Mac are ratcheting up their mandatory fees and toughening credit score and down-payment rules as of April 1.

Most major lenders already are pricing in the higher fees, effectively raising costs to consumers immediately and reducing the impact of housing stimulus efforts from Congress and the Obama administration.

Under Fannie's and Freddie's new guidelines, even applicants who assumed that their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or higher. For example, a buyer with a 699 FICO score who can bring a sizable down payment of about 25 percent to the table will now get hit with a 1.5 percent "delivery" fee at closing under the new guidelines.

A buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO -- once considered a platinum guarantee of the best rates available -- will get dinged with a quarter-point add-on.

Applicants who seek to buy a condominium and cannot come up with a 25 percent down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score -- simply because they are not purchasing a traditional detached, stand-alone home.

Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a flat 1 percent add-on from Fannie, even if they've got FICOs above 800 and make 50 percent down payments. Refinancers who take cash out at settlement also will be forced to pay extra -- as much as three points if they've got low credit scores and modest equity stakes.

Both Fannie Mae and Freddie Mac say they are tacking on these extra fees to counter higher risks and losses associated with certain loan products, buyer equity stakes and credit scores. Declining home values in many parts of the country are intensifying losses for both companies when loans go to foreclosure.

Though quasi-private enterprises until last September, Fannie and Freddie now are operating under the control of federal regulators and are bleeding billions of dollars of red ink. Freddie spokesman Brad German said that some of the loan categories and credit risk combinations targeted in the latest round of fees "default at four to eight times" the rate of other mortgages in the company's portfolio. "We have to manage these risks appropriately," he added, and that means pricing them based on the probability of higher losses. Continued...