WASHINGTON (6/6/14)--The Federal Housing Finance Agency (FHFA) is requesting comment on changes to the guarantee fees (g-fees) that Fannie Mae and Freddie Mac charge lenders.
In January, FHFA Director Mel Watt suspended implementation of pending g-fee changes until they received further review.
The proposed changes were developed under former acting Director Ed DeMarco. The FHFA had planned to increase base guarantee fees for all mortgages by 10 basis points, update the upfront guarantee fee grid to better align pricing with the credit risk characteristics of the borrower, and eliminate the upfront 25 basis point adverse market fee, except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average.
The Credit Union National Association raised the issue of containing g-fees when President/CEO Bill Cheney and senior CUNA staff met with director Watt and his FHFA advisers in April. Working with the CUNA Lending Council and CFO Council, CUNA will file a strong letter urging the agency to limit fees as much as possible and consider their impact on smaller lenders.
Fannie Mae and Freddie Mac charge g-fees to cover costs associated with providing a credit guarantee to ensure the timely payment of principal and interest to investors in mortgage-backed securities if a borrower fails to pay.
In its Request for Input released Thursday, the FHFA poses questions related to such things as the optimum level of g-fees required to protect taxpayers, and the implications for mortgage-credit availability.
Comments should be submitted to the Federal Housing Finance Agency, Office of Policy Analysis and Research, 400 7th St. SW, Ninth Floor, Washington, D.C. 20024 or via FHFA.gov. The deadline is Aug. 4.