However, realty agents, mortgage bankers and brokers are incensed at the new round of fee increases, calling them counterproductive in an environment where housing needs help, not new impediments. They have begun lobbying Congress and the two companies' federal overseers to scrap the latest add-ons.
Charles McMillan, president of the National Association of Realtors, complained in a letter to the Federal Housing Finance Agency, the regulator of Fannie and Freddie, that not only were individual fee increases unjustified, but that in combination they could seriously deter home purchases. McMillan said "a borrower with a credit score of 670 making a 20 percent down payment for a condominium would have the fee raised from 150 basis points (1.5 percent) to 350 basis points (3.5 percent) -- more than double" under Fannie Mae's new schedule.
"They're shooting themselves in the foot," said Steve Stamets, a mortgage loan officer in Rockville, Md. With substantial down payments of 20 percent and more, said Stamets, "they don't need to be that tough" on applicants even if home prices decline slightly more before the cycle ends.
"When consumers with 720 credit scores are being adjusted, there is something seriously wrong with the system," said Harry H. Dinham, a Dallas, Texas, mortgage company owner and former president of the National Association of Mortgage Brokers.
As recently as two years ago, FICO scores in the upper 600s were enough to qualify any applicant for prime financing. Now scores of 720 to 740 are the bare minimum if you're going to escape add-on fees -- and still not good enough if you choose to buy a condo or a duplex.
Where's all this headed? Absent congressional intervention or new marching orders from the companies' regulator, the add-on fees are here to stay. But there's an alternative readily available for just about anyone who wants to avoid the fees: FHA mortgages, where down payments go as low as 3.5 percent and credit scores are not an issue for most applicants.