Tuesday
July 22, 2014

Fannie, Freddie to Hike 'Guarantee' Fee on Lenders

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Fannie, Freddie to Hike 'Guarantee' Fee on Lenders

Fannie Mae and Freddie Mac plan to hike fees they charge lenders, which may increase borrowing costs for home buyers. But it's likely to happen only in four states. 

The Federal Housing Finance Agency, which regulates the mortgage giants, says Fannie Mae and Freddie Mac will raise the "guarantee" fee they charge lenders by 0.1 percentage points. The change will take effect next March. Since 2009, the fees have nearly doubled.

However, the increase may be offset in most states. Fannie and Freddie will be eliminating a separate fee that was added during the financial crisis, so many borrowers are unlikely to see any fee changes on their end.  

Four states, though, where foreclosures take some of the longest to process and lenders still face potentially high losses may see borrowing costs rise slightly. Those four states are New York, Florida, New Jersey, and Connecticut. 

Lawmakers in those four states have protested the increases, arguing they’ve been unfairly singled out, The Wall Street Journal reports. 

Fannie Mae and Freddie Mac’s “guarantee” fee covers potential payments to investors that the government-sponsored enterprises are required to make when a loan defaults.

“The price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating,” Edward DeMarco, the FHFA’s acting director, said in a statement.

Source: “Fannie, Freddie to Raise Loan Fees,” The Wall Street Journal (Dec. 9, 2013)

Read more: 

FHA to Drop Upper Mortgage Limits Jan. 1
Fannie, Freddie Retain Higher-Priced Mortgage Limits