Fannie, Freddie Fee Hikes Delayed for Review
December 26, 2013
The incoming director of the Federal Housing Finance Agency says that he will delay Fannie Mae and Freddie Mac's planned increases on mortgage fees until he has time to review the reasoning behind it.
The move by Mel Watt, D-N.C., who was confirmed by the Senate earlier this month, comes after FHFA's current acting director Edward J. DeMarco announced the hikes.
Fannie Mae and Freddie Mac said earlier this month that they intend to charge more to lenders who guarantee loans for borrowers with mid-range-or-below credit scores, as well as borrowers who don't meet certain down payment guidelines. The fee increases, which lenders likely would have passed down to borrowers, could have cost a borrower with a $200,000 30-year mortgage about $4,000 extra over the life of the loan — or about $11.11 extra per month.
The fees were set to take effect in March and April. Critics in the mortgage and housing industry had argued that the fees were too high and that fee hikes on lenders are usually passed on to borrowers via higher interest rates.
“I felt it was important to announce my intentions now because of the prospect that some lenders could start to price the proposed changes into the market well before the effective dates,” Watt wrote in an email to reporters.
Watt will be sworn in as FHFA’s new director on Jan. 6.
Watt also said he would delay fee hikes planned for states with long foreclosure timelines. The hikes would likely have meant higher fees specifically for four states with the longest foreclosure process: New York, New Jersey, Connecticut, and Florida.
Fannie and Freddie back about 60 percent of all U.S. mortgages.
Source: “New FHFA director stops rate hikes short,” HousingWire (Dec. 23, 2013) and “Fannie Mae Fee Increases to be Delayed by FHFA Under Watt,” Bloomberg (Dec. 21, 2013)
Updated: February 14, 2020