The Federal Housing Finance Agency (FHFA) has released its sixth annual report on the single-family guarantee fees (g-fees) charged by Fannie Mae and Freddie Mac. The report includes data from 2009 through 2013 and shows that g-fees more than doubled over this period and increased at a higher annual rate in 2013 than in the prior four years. The report also reflects the impact of g-fee policy changes in previous years and changes in risk-adjusted g-fees by product type and volume, indicating that:
►Guarantee fees increased to an average of 51 basis points in 2013 compared to an average of 36 in 2012 and 22 in 2009;
►The g-fee increases in 2012 reduced pricing differences between small and large lenders in 2013;
the percentage of loans sold to Fannie Mae and Freddie Mac by extra-large lenders decreased from 60 percent in 2010 to 49 percent in 2013 while the percentage of loans sold by extra-small lenders increased from 8 percent to 19 percent over the same time period;
►The 2012 fee increases also substantially reduced the pricing difference between 30-year fixed rate and 15-year fixed rate loans.
The Housing and Economic Recovery Act of 2008 requires FHFA to submit annual reports to Congress on g-fees. The fees are intended to cover the costs Fannie Mae and Freddie Mac incur for guaranteeing the payment of principal and interest on single-family loans they purchase from mortgage lenders. Those fees cover projected credit losses from borrower defaults over the life of the loans, administrative costs, and a return on capital.
FHFA published a Request for Input in June 2014 seeking public input on a number of questions related to future guarantee fee policy and implementation. The input period ended on September 8, 2014, and FHFA is currently in the process of reviewing the submissions.
