Hidden mortgage fee another black eye for government, housing
This week CBS News broke a story on the funding behind the much-talked-about “payroll tax cut” extension of late December. What they found wasn’t exactly a PR win for anyone.
You remember the story: The political football was huge going into the holiday season and everyone in Washington was pointing fingers, accusing each other of throwing the “middle class” under the bus by “obstructing” the payroll tax cut extension through February. (Never mind that it isn’t even a cut in taxes, but instead a cut to the employee contribution into the social security trust fund, which I’m told elsewhere is a good thing.) After the whole fight boiled over, the House of Representatives caved and agree to the extension, just to get out of town for Christmas, I expect.
Fast forward to February and CBS has discovered that a fee to pay for this bill has been imposed on — wait for it — housing. Specifically, mortgagors when they purchase or refinance a home. The fee amounts to one-tenth of 1 percent and is in effect over the life of the loan. Given the large amounts we’re dealing with when it comes to mortgages, the total cost to mortgagors could run into the thousands. Some cut, eh?
CBS tried to find the actual human in Washington who authorized the fee, which is buried in your mortgage rate. The network couldn’t get anyone on Capitol Hill to identify the author, but the White House defended the fee (showing that it knew about it but didn’t disclose it at the time).
Lastly, the money collected by lenders to pay the fee will be moved into the U.S. Treasury General Fund rather than being socked away in the Social Security Trust Fund. That way, Washington can spend it without having to say it raided Social Security. Amazing.
To watch the CBS segment, click here.
What bothers me from a real estate perspective is that Washington, while saying at town halls and campaign rallies that housing needs help to lead us out of the recession, allows staffers/committees/politicians to enact direct burdens on housing. There’s no getting around the message: Do as we say, not as we do. It’s yet another black eye for both the housing market and government in the eyes of the American public.
How long until the elections again?
Jeff Geoghan is vice president of marketing and communications for Coldwell Banker Select Professionals and Select Services, based in Lancaster City, with 10 offices in eight Central Pennsylvania counties. Jeff lives in East Petersburg where he also serves as mayor. Jeff has been actively involved in local government and business and has been used as a source by local, regional and national publications.