Hidden mortgage fee paying for payroll tax cut

CBS News ^ | February 6, 2012 | Sharyl Attkisson

[LibFreeUSA]

(CBS News)

Just before Christmas, American workers got a rare gift from Washington politicians - the current payroll tax cut would be extended for two more months.

At the time, both President Barack Obama and House Speaker John Boehner lauded the move to avoid a tax increase for millions of working Americans.

But there's something the politicians weren't bragging about - the fact that they're paying for the two-month tax cut with what has turned into a brand new fee on home buyers.

The new fee is a minimum of one-tenth of 1 percent on Fannie Mae- and Freddie Mac-backed loans, and is likely to go much higher.

It will be imposed for the next 10 years on most mortgages and refinancings and it lasts for the life of the loan.

Obama unveils mortgage refinancing plan Congress preps Round 2 of payroll tax-cut fight Budget cuts, fees eyed in payroll tax talks

For every $200,000, it amounts to an extra $15 dollars a month.

It's bad news for Patty Anderson, who's buying a home in Virginia.

Anderson will save a couple hundred dollars from having her payroll tax cut extended but her mortgage broker told her the new fee would cost her almost $9,500.

"I was absolutely startled that it would add up to that much," she said.

The $35.7 billion collected in fees won't go into the Social Security fund to replace the lost payroll tax. It goes to the general treasury where Congress can spend it however they please.

Bill Burnett, Anderson's broker and president of the Virginia Association of Mortgage Brokers, said you won't see Congress' new charge in the paperwork, but it's there.

"It's actually built into this [interest] rate. You would never see the fee as a cost to you," he said.

Burnett said the fee will affect a "very large number" of homeowners.

"Your pocketbook is being raided in order to pay for a tax policy issue decided at the last minute by probably people who didn't understand fully what they were legislating on."

CBS News went to Capitol Hill ask what Congress was thinking when they passed the mortgage fee hike. Boehner pointed the finger at the Senate.

"As you're well aware, this bill came over from the Senate. I don't know how they justified it. We would rather have offset that two-month extension with reductions in spending," he said.

But the Senate blamed the House. And Democrats and Republicans blamed each other.

One congressman, Florida Republican Allen West, said he tried to blow the whistle on the whole thing before Christmas.

"I read the legislation and raised the flag. Unfortunately nobody paid attention to what I was saying at the time," he said, calling the fee a backdoor tax increase on the middle class.

"It absolutely is because you're talking about the homeowners - when you're talking about the people that are gonna be using the Fannie Mae, the Freddie Mac, the government-sponsored enterprises - it is absolutely a tax increase on them."

An Obama administration official defended the mortgage fee, calling it "modest." She said it's "unlikely to negatively affect borrowers" because increases "will be phased in over the next two years." And it will "help bring private capital back into the mortgage market, which [is] good for borrowers over the long term."

Maybe so. But Patty Anderson only knows that for the next 30 years, she'll be haunted by the Washington ghost of Christmas past.

"I think it just looks like Washington grabbing more money," she said.

[Eric in the Ozarks]

Fire him.

[LibFreeUSA]

DEC 23, 2011 - Allen West:

“I cannot support this, but it seems the politics of demagoguery have won over policy and principle with the concession to enact tax policy on two-month basis,” West wrote. “This is a sad day for America and further evidences our continuing decline. Men and women of principle are become a dying breed in this Republic.”

West went on to criticize a conference call held by House Republican leadership Friday in which the deal, in which Republican agreed to pass the two-month extension of the tax cuts in exchange for a promise to appoint conferees to strike a year-long deal by Senate Majority Leader Harry Reid (D-Nev.).

“The conference lasted less than 15 minutes and we were not allowed to ask questions,” West wrote. “We were told that by unanimous consent the House will pass the Senate Amendment with a correction to the new payroll reporting procedures. Harry Reid agreed to appoint conferees but we were not told any timeline for this move.”

[lacrew]

“An Obama administration official defended the mortgage fee, calling it “modest.”

Fifteen dollars a month is not modest. I deal in a world that forecasts budgets for street improvements, which ultimately become ‘special assessments’. To me, fifteen dollars is a big increment. In general, this means a person’s pay has to be an additional $60 a month to be able to pay this fee...or $0.35 an hour.

It seems minor, but it isn’t. So what happens? Johnny homebuyer buys a house that costs $10,000 less...amazing, when the federal government takes money, it isn’t from thin air - its from the local economy.

[lacrew]

“An Obama administration official defended the mortgage fee, calling it “modest.”

Fifteen dollars a month is not modest. I deal in a world that forecasts budgets for street improvements, which ultimately become ‘special assessments’. To me, fifteen dollars is a big increment. In general, this means a person’s pay has to be an additional $60 a month to be able to pay this fee...or $0.35 an hour.

It seems minor, but it isn’t. So what happens? Johnny homebuyer buys a house that costs $10,000 less...amazing, when the federal government takes money, it isn’t from thin air - its from the local economy.

[LibFreeUSA]

Someone should ‘primary’ this guy. He is nothing but a career politician out for his own power over people, and screw everyone else. What a waste! I would trade a Democrat beating him in the election in return for getting him out of the Leadership position. He is hurting our side more than one single Democrat vote could hurt us.

[opentalk]

Sharyl Attkisson is one of the few investigative reporters in MSM . She exposed Fast and Furious.

[MrB]

If the mortgage fee is hidden, that means that we can’t deduct it, either.

[mtrott]

OK, so folks who have saved up their money to put down on a house now will have to pay more per month so as to help bail out underwater homeowners who may have put little or no money down when they originally bought their homes? Yep, that is the democrat/Obama way of buying votes, with other people’s money. Screw the people who are responsibly purchasing homes under today’s more appropriate underwriting standards.

[Qbert]

"One congressman, Florida Republican Allen West, said he tried to blow the whistle on the whole thing before Christmas.

"I read the legislation and raised the flag. Unfortunately nobody paid attention to what I was saying at the time," he said, calling the fee a backdoor tax increase on the middle class.

Once again, Rep. Allen West leads the way while the others sleepwalk.

[lacrew]

“If the mortgage fee is hidden, that means that we can’t deduct it, either.”

Interesting. The end of year paid interest statement would not match the rate you thought you had? More convoluting of paperwork and numbers, to make it nearly impossible to understand what kind of magic is going on behind the curtain.

[Eva]

I have to wonder if Alan West’s opposition to this hidden mortgage fee played a part in him being re-districted out of his seat by the Romney supporters in Florida.

They were probably telling the truth, that it had nothing to do with Romney, they just happen to be the same people.

[Prokopton]

CBS News went to Capitol Hill ask what Congress was thinking when they passed the mortgage fee hike. Boehner pointed the finger at the Senate.

Crybaby Boehner is a Democrat plant and the primary supporter and enabler of the Obama agenda. With "Republicans" like this, it makes little difference who the next president is.

[HereInTheHeartland]

Yep. My rates went up 1/4 one day to pay for this when it took effect. The cowards in DC slipped this in thinking no one would notice.

Rates have gotten better to the point where they are back where they were when this hit, but people are paying that 1/4% premium and probably don't know it.

[gnickgnack2]

Did this fee go on to all existing mortgages or just any newly created mortgages?

[gnickgnack2]

Did this fee go on to all existing mortgages or just any newly created mortgages?

[gnickgnack2]

Did this fee go on to all existing mortgages or just any newly created mortgages?

[WilliamEaton]

What a terrible idea. we need more transparency in taxes and fees - not less like this. This is probably a trial run of the long dreamed of financial transaction tax that gets the left all excited.

[LibFreeUSA]

Calm down. Only the poor suckers with new mortgages. If they had actually got the nerve to existing mortgages, this would have caused a real revolution (and not the ‘peaceful’ type). However, we’re not too far away from the bastards in DC (both parties) from trying to get away with that in the not too distant future.

Right now I am so pissed off at Boner for this collusion, that I am going to contribute to anyone who runs against this guy (and I don’t care what party it is).

Tell me ONE piece legislation that this Boehner can claim a victory for in becoming law, based on the strength of the 2010 election and not on weakness of caving in. Just ONE!

When push comes to shove the RATs know that they can push against this stooge and the rest of the Republican House Leadership and fully expect for them to cave like wet noodles. I blame the House Republicans for electing this piece of crap Speaker.

[Eric in the Ozarks]

Tom Harkin’s wet dream.