Magazine article American Banker

FHFA Moves Cautiously in Reducing Loan Fees

Magazine article American Banker

FHFA Moves Cautiously in Reducing Loan Fees

Article excerpt

Byline: Brian Collins

The Federal Housing Finance Agency is expected to announce as soon as Friday a modest reduction in certain fees that Fannie Mae and Freddie Mac charge on single-family loans.

The reduction appears likely to involve loan-level price adjustments that the two government-sponsored enterprises charge borrowers and adverse market fees charged on every loan, but not a guarantee fee reduction that the industry has sought.

"Everything I have heard indicates the FHFA is going to adjust the loan level fees and probably leave the guarantee fee alone," said Glen Corso, the executive director of the Community Mortgage Lenders of America.

The FHFA solicited public comment in June on resetting guarantee fees, but shied away from making any recommendations.

FHFA Director Mel Watt's first official action when he took office last year was to suspend a 10-basis-point increase in the G-fee planned by his predecessor Edward DeMarco. Some in the industry had hoped Watt would then move quickly to reduce the fees instead.

But Watt is likely to announce Friday that the agency will eliminate a 25-basis-point adverse market fee the GSEs charge on every loan. Fannie and Freddie implemented the fee when home prices were falling nationwide. But home prices are due to rise 6% in 2015 and 5% in 2016, according to CoreLogic.

Reducing the adverse market fee is "low-hanging fruit if they want to open up credit availability," said Joe Ventrone, vice president of regulatory and industry relations at the National Association of Realtors. …

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