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Sept. 9, 2014 – NAFCU Regulatory Affairs Counsel Angela Meyster yesterday urged the Federal Housing Finance Agency not to raise guarantee fees, or g-fees, for loans sold to Fannie Mae and Freddie Mac.

"Raising g-fees would result in a negative impact on the housing market," Meyster wrote in a response to FHFA's June request for input on the issue. "The cost of borrowing will greatly increase and lending will inevitably slow down. Rather than increasing g-fees, NAFCU believes reducing g-fees or keeping them at their current level is necessary to the continued recovery and stabilization of the housing market.

"In NAFCU's August 2014 Economic and CU Monitor survey, 81% of NAFCU members polled indicated that the current level of g-fees should remain," she continued. "Further, loan originations would inevitably decrease if the Enterprises continued to raise g-fees because the rising cost of mortgage lending would either need to be absorbed by the lender or passed on to the borrower in the form of risk-based fees or higher interest rates."

Meyster also recommended using the same risk-based pricing scheme for both Fannie Mae and Freddie Mac to allow greater loan flexibility. She said the fee structure should be simplified.

When fee increases were first entertained last year, NAFCU objected strongly, noting concerns that g-fee hikes would push up borrower costs and slow lending. FHFA Director Mel Watt later withdrew the proposal for further evaluation. Earlier this year, NAFCU joined with other trade groups in urging lawmakers not to use g-fees to extend emergency unemployment compensation.