The Federal Housing Finance Agency (FHFA) has announced the results of its comprehensive review of guarantee fees charged by Fannie Mae and Freddie Mac. FHFA has determined that current fees, on average, are at an appropriate level and that some modest adjustments to upfront guarantee fees are also appropriate. As a result of its review, FHFA is directing Fannie Mae and Freddie Mac to eliminate the adverse market charge put in place in March 2008 and to replace the revenue that resulted from the adverse market charge with targeted increases in guarantee fees to address various risk-based and access-to-credit considerations.
In making adjustments to the guarantee fees for certain categories of loans, FHFA took into account its decision to strengthen financial and operational eligibility standards for mortgage insurance companies. Overall, the set of modest changes to guarantee fees are roughly revenue neutral for the Enterprises and will result in either little or no change for most borrowers.
“This is the culmination of months of review and analysis and reflects input received from a wide range of stakeholders,” said FHFA Director Melvin L. Watt. “Our goal is to assure taxpayers, homeowners and industry that we are striving for an appropriate balance between safety and soundness and liquidity in the housing finance market,” Watt said.