Before Christmas, Washington was in full spin mode trying to pass an extension to the payroll tax cut. Congress ended up extending it for two months, despite economists saying it hadn't helped much in the first place. The payroll tax cut is supposed to fund Social Security, thus, lower revenue reduces Social Security funding. Democrats are the party that constantly lie and say Republicans want to end Social Security, yet they're for reducing the funding of the entitlement program. Republicans failed to point this out at the time of the debate. The payroll tax cut has to get funded by something and we now know what that "something" is. A hidden mortgage fee is paying for the payroll tax cut. This was never communicated to Americans, but new homeowners are finding out the hard way.
The payroll tax cut is being paid for by a new fee on home buyers. It's a minimum of one-tenth of one percent on loans by two of the pioneers of the housing crisis, Fannie Mae and Freddie Mac. They're the nation's largest mortgage lenders. The hidden fee is in place for 10 years and it's imposed on most mortgages and home refinancing. It lasts for the life of the loan.
From CBS News:
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."
Some in Congress warned about the new fee, but it was ignored by virtually everyone. Ultimately, it's the media that should be reporting on these issues. Once again, they failed.
The Obama administration defended the fee, which they called "modest." But that's how liberals view everything when it doesn't affect them personally. The fact is that this is a new fee imposed on home owners. The fee generates revenue that Congress can spend any way they'd like. This was not a mistake; it was planned by the Democrats to get additional revenue so they can spend it on programs that further increase dependency of the individual on the government.
This fee went under the radar intentionally. The bigger question now is, what other fees have been imposed that we don't know about?
Chuck Justice is the editor-in-chief for Habledash.
