WASHINGTON Aug 31 Fannie Mae and Freddie Mac
will raise the fees they charge mortgage lenders by the end of
the year, their regulator said on Friday, a step designed to
encourage private firms to wade back into the housing finance
The so-called guarantee fees that the two
government-controlled 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.
The Obama administration has proposed increasing the fees as
a way to reduce the government's role in the housing market,
where Fannie Mae and Freddie Mac guarantee the majority of new
The two companies, which buy mortgages from lenders and
repackage them as securities for investors, were taken over by
the government in 2008 when their mortgage-related losses
threatened the financial system. So far, the companies have
drawn a total of $188 billion in taxpayer aid to stay solvent.
"These changes will move Fannie Mae and Freddie Mac pricing
closer to the level one might expect to see if mortgage credit
risk was borne solely by private capital," said the regulator's
acting director Edward DeMarco.
Earlier this year, the companies were required to raise
their guarantee fees by 10 basis points to pay for a two-month
extension in the payroll tax break.
JPMorgan analysts predicted the latest mortgage fee increase
would raise around $25 billion for Fannie Mae and Freddie Mac