Fannie Mae, Freddie Mac to hike mortgage guarantee fees

WASHINGTON Mon Dec 9, 2013 6:02pm EST

Fannie Mae headquarters is seen in Washington November 7, 2013. REUTERS/Gary Cameron

Fannie Mae headquarters is seen in Washington November 7, 2013.

Credit: Reuters/Gary Cameron

WASHINGTON (Reuters) - Fannie Mae and Freddie Mac will raise certain fees they charge mortgage lenders, their regulator said on Monday, a step designed to encourage private firms to wade back into the housing finance market.

The so-called guarantee fees that the two taxpayer-owned companies charge lenders to guarantee new loans will increase by an average of 10 basis points, the Federal Housing Finance Agency said in a statement.

Increasing the guarantee fee will ultimately make it more expensive for lenders to use the government-controlled companies to back their loans and give them an incentive to use the financial market instead.

Edward DeMarco, acting director of the Federal Housing Finance Agency, said the fee increases are needed to shrink the footprint of the two companies in the mortgage market.

"The price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating. These changes should encourage further return of private capital to the mortgage market," DeMarco said.

Fannie Mae and Freddie Mac charge the fees to investors for guaranteeing principal and interest.

In addition to a yearly 10-basis point increase, the FHFA said Fannie and Freddie will alter the pricing frameworks used to assess credit risk characteristics of borrowers. The agency also eliminated most across-the-board adverse market fees.

FHFA said it anticipates that this adverse market fee will be re-evaluated on an annual basis.

(Reporting by Margaret Chadbourn; Editing by Leslie Adler)

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Comments (1)
gcf1965 wrote:
This clown was/is my congressman. He is in no way qualified to be a congressman, let alone in charge of Fannie/Freddie. Mel Watt is a stereotypical ignorant southern old fool who should be moonshinin’ or some other such non-sense. He is dumber than a bag of dirt. Just another perfect example of obama wanting to surround himself with people who are even more inept than he is just to appear less incompetent. How about that Charlotte mayor now running transportation? Ever been through Charlotte? A town of roughly a million people with a transportation infrastructure roughly equivalent to 1950′s Mayberry.

Dec 09, 2013 2:07pm EST  --  Report as abuse
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