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Middle Class Payroll Tax Cut Extension Comes Courtesy of Mortgage Fees on Home Buyers

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By Doug Powers  •  February 6, 2012 01:36 PM

**Written by Doug Powers

During the clamor to pass an extension of the payroll tax cut, President Obama asked “What does $40 mean to you?”

His opponents of the way the extension was handled might now be able to counter with, “What does $9,500 mean to you?”

(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. 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.
[…]
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.

Is this outlined in the Homeowners Bill of Rights?

For now, file this under “robbing Peter for decades to pay Peter for a couple of months”:

**Written by Doug Powers

Twitter @ThePowersThatBe

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Categories: Barack Obama, Health care, New York Times, Paul Krugman