FHFA Raises Guarantee Fees 10 Basis Points

Posted on Aug 31, 2012

Fannie Mae and Freddie Mac's guarantee fees (g-fees) on single-family mortgages are set to go up by an average of 10 basis points.  The increase was announced by the Federal Housing Finance Agency (FHFA) this morning and takes effect for loans sold for cash on November 1 and for loans exchanged for mortgage-backed securities (MBS) one month later.   

FHFA stated the higher g-fee pricing is intended to encourage greater participation in the mortgage market by private firms, a goal set in the agency's Strategic Plan for Enterprise Conservatorships.  The two government-sponsored enterprises (GSEs) said they will work directly with lenders to implement the changes.

Acting FHFA Director Edward J. DeMarco said "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."

FHFA, conservator of the GSEs said the hike will increase uniformity of the g-fees charged to lenders to deliver large volumes of loans and those who deliver smaller volumes.  It will also reduce cross-subsidies between higher-risk and lower-risk mortgages by increasing g-fees on loans with maturities longer than 15 learns more than on shorter term notes.

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