Fannie Mae, Freddie Mac to raise mortgage fees: regulator

Reuters News
Posted: Aug 17, 2012 8:53 AM
Fannie Mae, Freddie Mac to raise mortgage fees: regulator

WASHINGTON (Reuters) - Fannie Mae and Freddie Mac will raise the fees they charge mortgage customers by the end of the year, their regulator said on Friday, a step designed to encourage private firms to wade back into the housing finance market.

The so-called guarantee fees or g-fees that the two government-controlled companies charge lenders to guarantee new loans will increase by an average of 10 basis points, the Federal Housing Finance Agency said in a statement.

The Obama administration has proposed increasing the fees as a way to reduce the government's role in the housing market, where Fannie Mae and Freddie Mac guarantee the majority of new home loans.

The two companies, which buy mortgages from lenders and repackage them as securities for investors, were taken over by the government in 2008 when their mortgage-related losses threatened the financial system. So far, the companies have drawn a total of $188 billion in taxpayer aid to stay solvent.

"These changes will move Fannie Mae and Freddie Mac pricing closer to the level one might expect to see if mortgage credit risk was borne solely by private capital," said the regulator's acting director Edward DeMarco.

(Reporting By Rachelle Younglai; Editing by Chizu Nomiyama)