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Friday, December 30, 2011 - 8:14amSanction this postReply
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The article refers to "g fees." Here is a definition. For example, assume the following. A homebuyer gets a mortgage with a 5% interest rate. The lender sells it to Fannie Mae, which securitizes it. Fannie Mae keeps a part of each payment the borrower makes, e.g. 25 basis points (0.25%) times the outstanding mortgage balance, for administrative expenses, including passing the rest of each payment onto investors, and default risk. The interest part is a big part of the mortgage payments in the early years of the mortgage, so "g fees" are largest early on and dwindle in step with the outstanding mortgage balance.

The article mentions a "10-year increase." The amount of the increase was 10 basis point (0.10%). See here. That is a substantial increase percent-wise, e.g. 25 basis points to 35 basis points is a 40% increase.

Money-grubbing politicians!


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