Galloway and Collens, PLLC
We are here for you during the COVID-19 emergency.
Please call 248-284-1990 to reach our receptionist or fill out the contact page of our website and we will be in touch.

Fees on mortgages set to increase

Each mortgage contains a small hidden fee, known as the guarantee fee, or "G-fee." The fee has been silently included in mortgages for more than 30 years, and Congress has recently mandated an increase. It is not clear at this time when the increase will take effect, but it analysts anticipate that it will also cause interests rates to rise slightly.

If you are considering purchasing a home or refinancing your mortgage, make sure you get sound legal advice on your best options. It's also important to have a knowledgeable lawyer who can help you understand all of the terms of the contract and what your rights will be if you agree to the deal. Many potential borrowers may not know that some terms are negotiable.

The fee doesn't show up in estimates for potential borrowers, nor does it appear on mortgage documents. A spokesperson for Fannie Mae said that the g-fee gets incorporated in to the underlying rate that borrowers pay. Industry experts say that the g-fee is related to the sale of mortgage-backed securities. The fee can act as insurance against possible defaults for the loans that the plan to sell to investors.

Borrowers may be able to avoid the g-fee by working with a lender that does not sell of its loans as mortgage-backed securities.

In states like Michigan that continue to struggle with foreclosure, it may be difficult to find a bank that does not charge the fee. Often, banks charge the fee based on a percentage of the total value of your loan. With the government mandate to raise the fee slightly, some banks may turn to a flat fee to more evenly distribute the cost across all borrowers.

Source: New York Times, "Hidden Fee is Set to Rise," March 1, 2012.

No Comments

Leave a comment
Comment Information
  • Sterling
  • dbusiness - Top Lawyers
  • SuperLawyers 2019
  • Rainbow Image
  • Senior & Caregiver
  • ICLE Contributor
Email Us For A Response

Contact Our Metro Detroit Attorneys

Our law firm is ready to help. Contact the real estate and estate planning attorneys at Galloway and Collens, PLLC, by calling 248-284-1990.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

This site uses Google's Invisible reCAPTCHA, which is subject to Google's Privacy Policy and Terms of Use.

26075 Woodward Avenue Suite 200 Huntington Woods, MI 48070-1341 Phone: 248-284-1990 Fax: 248-545-2520 Huntington Woods Law Office Map