Fannie Mae, Freddie Mac to hike mortgage guarantee fees


WASHINGTON, Dec 9 (Reuters) - Fannie Mae andFreddie Mac will raise certain fees they chargemortgage lenders, their regulator said on Monday, a stepdesigned to encourage private firms to wade back into thehousing finance market.

The so-called guarantee fees that the two taxpayer-ownedcompanies charge lenders to guarantee new loans will increase byan average of 10 basis points, the Federal Housing FinanceAgency said in a statement.

Increasing the guarantee fee will ultimately make it moreexpensive for lenders to use the government-controlled companiesto back their loans and give them an incentive to use thefinancial market instead.

Edward DeMarco, acting director of the Federal HousingFinance Agency, said the fee increases are needed to shrink thefootprint of the two companies in the mortgage market.

"The price changes provide better protection of and returnto taxpayers, who are providing the capital support that keepsthese companies operating. These changes should encouragefurther return of private capital to the mortgage market,"DeMarco said.

Fannie Mae and Freddie Mac charge the fees to investors forguaranteeing principal and interest.

In addition to a yearly 10-basis point increase, the FHFAsaid Fannie and Freddie will alter the pricing frameworks usedto assess credit risk characteristics of borrowers. The agencyalso eliminated most across-the-board adverse market fees.

FHFA said it anticipates that this adverse market fee willbe re-evaluated on an annual basis.

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