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November 1, 2014

FHFA Seeks Comments on G-Fee Hikes

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FHFA Seeks Comments on G-Fee Hikes

The Federal Housing Finance Agency is collecting public comments on guarantee fees, the items that mortgage giants Freddie Mac and Fannie Mae charge lenders also known as G-fees. 

In December 2013, former FHFA director Edward DeMarco had announced that G-fees would gradually rise throughout this year. FHFA Director Mel Watt had instructed the agency to stop a proposed 10-basis point hike in G-fees when he took in office in January, in order to review the proposal further and solicit public feedback. He delayed the proposed hikes amid growing concerns that the rise in G-fees could prove costly for consumers since lenders may then pass the higher costs down to buyers. 

“The implications for mortgage credit availability and how these changes might interact with the new qualified mortgage standards could be significant,” Watt had said at the time. “I want to fully understand these implications before deciding whether to move forward with any adjustments to G-fee pricing.”

FHFA is asking the public to respond to 12 questions about how the fees are set and the impact of the fees on mortgage credit availability. For example, they ask: “If the enterprises continue to raise G-fees, will overall loan origination decrease? That is, will enterprise loans decline without a commensurate increase in private capital?” 

DeMarco argued that the "price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating." The National Association of REALTORS® praised Watt for halting the hikes.

“NAR appreciates the call for input from FHFA Director Mel Watt,” says NAR President Steve Brown. “Since the guarantee fees charged to lenders are ultimately passed on to borrowers, examining the fee structure is an important component of ensuring liquidity in the market and affordability for credit-worthy buyers. Increased fees limit access to credit by making mortgages excessively expensive, even for well-qualified buyers.”

Comments must be submitted to the FHFA by Aug. 4.

Source: “FHFA Seeks Input on Setting Fannie, Freddie G-Fees,” National Mortgage News (June 5, 2014) and “FHFA considers G-fee increase,” HousingWire (June 5, 2014)

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