In early December, the Federal Housing Finance Agency (FHFA) announced plans to increase the base guarantee fee (g-fee) for all mortgages by 10 basis points, update the upfront g-fee grid, and eliminate the up-front 25 basis point adverse market fee that has been assessed on all mortgages purchased by Fannie Mae and Freddie Mac since 2008 effective in March and April 2014. The FHFA has announced that it has directed Fannie Mae and Freddie Mac to delay implementation of these changes.
FHFA Director Melvin L. Watt, who was sworn in as Director on Jan. 6, said that he intends to conduct a thorough evaluation of the proposed changes and their likely impact as expeditiously as possible, and would give not less than 120 days’ notice after completing the evaluation before implementing any changes.
“The implications for mortgage credit availability and how these changes might interact with the new qualified mortgage standards could be significant,” said Watt. “I want to fully understand these implications before deciding whether to move forward with any adjustments to g-fee pricing.”
“Realtors applaud the decision by Federal Housing Finance Agency Director Mel Watt to delay increases in guarantee fees on loans purchased by Fannie Mae and Freddie Mac," said National Association of Realtors (NAR) President Steve Brown. "In a September 2013 letter, NAR called on FHFA to refrain from changing its fee structure until completing an analysis to determine the effectiveness of its fee pricing policy at bringing private enterprise back into the market."