FHFA ups g-fees for Fannie, Freddie

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Dec. 10, 2013 – The Federal Housing Finance Agency on Monday announced increases in g-fees, or guarantee fees, that Fannie Mae and Freddie Mac will charge lenders beginning in March.

The g-fee increases are part of the agency’s strategic plan for the conservatorships of the two government-sponsored enterprises, one goal being to attract more private capital to the mortgage market.

FHFA said it has directed Freddie Mac and Fannie Mae to raise guarantee fees in three components:

  • The base g-fee (or ongoing g-fee) for all mortgages will increase by 10 basis points.
  • The up-front g-fee grid will be updated to better align pricing with the credit risk characteristics of the borrower.
  • The up-front 25 basis point adverse market fee that has been assessed on all mortgages purchased by Freddie Mac and Fannie Mae since 2008 is being eliminated except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average.

FHFA expects these increases and decreases to produce an overall average g-fee increase of approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the third quarter of 2013. This represents an average increase of 14 basis points on typical 30-year mortgages and 4 basis points on 15-year mortgages.

The agency said that for loans exchanged for mortgage-backed securities, the prices changes will be effective with settlements starting  April 1. For loans sold for cash, the price changes will be effective with commitments starting March 1. Fannie and Freddie “will work directly with lenders to implement the changes,” the agency said.

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FHFA announcement