The Federal Housing Finance Agency (FHFA) said Thursday that it is requesting input on the level of guarantee fees that Fannie Mae and Freddie Mac should charge lenders.
In January, FHFA Director Mel Watt suspended the implementation of the fee changes announced by former acting director Edward DeMacro in December.
{mosads}Watt’s announcement temporarily quelled concerns within the housing and mortgage industry over the fees that they argued were too high and were set to happen too soon. They were originally scheduled to go up by 10 basis points this spring.
At the time, DeMarco said that “the new pricing continues the gradual progression toward more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital.”
Fannie and Freddie Mac charge the fees to cover the costs of providing the guarantee on mortgage-backed securities. Lenders typically pass on the fee increases to their borrowers.
In a May speech, Watt changed course for the FHFA, saying he would maintain rather than curtail the mortgage giants’ role in the housing market to ensure enough access to credit for borrowers.
The Senate Banking Committee has approved legislation that would revamp Fannie and Freddie and eventually eliminate the two entities, which have needed nearly $188 billion from taxpayers since 2008 to stay afloat. But that bill remains stuck in negotiations.
Fannie and Freddie have churned out enough profits in recent quarters to cover the cost of their bailout but some industry experts warn that they will be riding a fine line for profits in the future considering that tax adjustments and legal settlements are mostly complete.
The FHFA said it is seeking the optimal level of the fees to “protect taxpayers and implications for mortgage credit availability.”
Input must be received within 60 days or no later than Aug. 4.