Who is John Galt? Looks like we could use a present day Galt with this kind of sham...

(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.

Obama unveils mortgage refinancing plan

Congress preps Round 2 of payroll tax-cut fight

Budget cuts, fees eyed in payroll tax talks

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."

CBS News went to Capitol Hill ask what Congress was thinking when they passed the mortgage fee hike. Boehner pointed the finger at the Senate.

"As you're well aware, this bill came over from the Senate. I don't know how they justified it. We would rather have offset that two-month extension with reductions in spending," he said.

But the Senate blamed the House. And Democrats and Republicans blamed each other.

One congressman, Florida Republican Allen West, said he tried to blow the whistle on the whole thing before Christmas.

"I read the legislation and raised the flag. Unfortunately nobody paid attention to what I was saying at the time," he said, calling the fee a backdoor tax increase on the middle class.

"It absolutely is because you're talking about the homeowners - when you're talking about the people that are gonna be using the Fannie Mae, the Freddie Mac, the government-sponsored enterprises - it is absolutely a tax increase on them."

An Obama administration official defended the mortgage fee, calling it "modest." (Modest to who?!?!?!)She said it's "unlikely to negatively affect borrowers" because increases "will be phased in over the next two years." And it will "help bring private capital back into the mortgage market, which [is] good for borrowers over the long term." I’d really be interested in learning what this means – I guess they are saying that people will go to more conventional loans where the fee is not included? But what happens when they do and the tax does not cover the new payroll extension and/or is this a cover because no one can afford a conventional at 15 – 20%. One place to start is learning how many loans are currently being backed by Freddie and Fannie.

Maybe so. But Patty Anderson only knows that for the next 30 years, she'll be haunted by the Washington ghost of Christmas past.

"I think it just looks like Washington grabbing more money," she said.

Docusign--Gone With the Wind?

Agents are always looking for ways to help their clients save time, energy and money during the real estate process.  Last year, after much skepticism, I purchased a virtual signature program called Docusign.  The premise of Docusign is that you can mark up a contract with virtual signature/initial tags in pdf format and send it via email to your clients for their virtual signature.  The process is accepted by the attorney general in all 50 states and has a verification process and affidavit that is supposed to protect consumers. 

Upon first use of this product, not only was I hooked but my clients loved it!  Why drive to my office or print out a bunch of paperwork that is subject to change daily until a contract is negotiated fully?  Why scratch through, highlight and mark up illegible faxed copies to the point they look like hieroglyphic nonsense?  Here was Docusign, the latest and greatest in real estate mobility and technology, available even as an app on iPhone and ipads and other smart devices.  Wow!  We were really making progress from the days of old, when I had to drive into my office to even retrieve voice mails!

Fast forward to today, after a year of Docusign investment, docs and templates saved online and the rest of my team signed up for this amazing service we get this--Notification on Monday that one of my buyers who is getting a conventional loan, needs to come in and give a "wet" signature because conventional lenders are no longer allowing Docusigned contracts.  Apparently, there has been fraudulent activity and lenders are trying to double-back and prevent future incidents.  Funny thing is, FHA and VA loans are still OK with it and allowing virtual signatures.  Now, correct me if I'm wrong, but given recent history, who REALLY needs to be watching out for fraudulent activity on our behalf?  Is this yet another example of private industry being ahead of the curve or is this just one more hurdle that buyers have to cross while trying to bolster the economy pretty much on their own?

The other interesting instance that has occurred with Docusign took place on a foreclosure that one of my buyers was purchasing.  We submitted the offer via Docusign  using virtual signatures, well before this recent notification took place (the good 'ol days) and was informed that we could not use the virtual signatures.  I met with my client, received "wet" signatures and resubmitted the offer.  Of course, this took several days and by the time the offer was sent to the other agent via scan, the quality was seriously compromised.  We did receive the signed offer back from Fannie Mae and guess what?  They used Docusign or another form of virtual signatures.  I guess the message to take from that is that the government is to be trusted and couldn't be fraudulent...hmmm...feels like a rerun of X files...