Home mortgages may become more costly in St. Louis thanks to local law


In spite of warning  from the Mortgage Bankers Association (MBA), the St. Louis Association of REALTORS (SLAR) and other housing-related groups of the damage the “Mortgage Foreclosure Intervention Code” (Bill #174 introduced by Hazel Erby, District 1) could do to the already struggling St Louis housing market, including increasing the cost of home mortgages, last month the  St. Louis County Council passed the bill, it was signed into law by County Executive Charlie Dooley and will go into effect on September 28, 2012. Then, just last week, Lewis Reed, President of the St. Louis Board of Alderman, introduced what is a basically the same bill in an attempt to get the same law enacted by the City of St. Louis.

Opponents of the law, including SLAR and the MBA, say this law will likely lead to higher cost mortgages in St Louis County (and, assuming they pass it, the city of St Louis) as lenders will increase fees to cover additional costs they will have in complying with this new law and proponents of the law say this is not so.  I think the proponents of the bill are wrong and am confident that this will lead to higher cost mortgages in areas that have enacted the Mortgage Foreclosure Intervention Code or similar laws. So, why am I so sure?  It just so happens that yesterday, the Federal Housing Finance Agency (FHFA), the agency charged with overseeing Fannie Mae and Freddie Mac, issued a notice of a proposal to increase mortgage fee pricing (guarantee fees that Fannie Mae and Freddie Mac charge) on loans in states where, due to laws and the requirements imposed upon lenders (or other investors) to “manage a default, foreclose and obtain marketable title to the property backing a single-family mortgage“, foreclosures take longer.  Continue reading “Home mortgages may become more costly in St. Louis thanks to local law