HousingWire – Jacob Gaffney
The Federal Housing Finance Agency announced the expected rise in the guarantee-fees charged to do mortgage business with Fannie Mae and Freddie Mac. The fees will go up gradually throughout the course of 2014.
The base g-fee, or ongoing g-fee, for all mortgages will increase by 10 basis points, the FHFA said. This represents an average increase of 14 basis points on typical 30-year mortgages and 4 basis points on 15-year mortgages, according to the FHFA.
According to a Bank of America Merrill Lynch (BAC) analyst, g-fees could have risen by up to 50 points. The up-front 25 basis point adverse market fee assessed on all mortgages purchased by Freddie and Fannie since 2008 is being eliminated. This will not include Connecticut, Florida, New Jersey and New York. "The new pricing continues the gradual progression towards more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital," said FHFA Acting Director Edward DeMarco in a statement. "The price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating."