Smart Borrower Blog

FHFA Postpones New Mortgage Fees…For Now

Dec 24th, 2013 @ 9:57 PM by Amber Nelson

Homebuyers can breathe a sigh of relief, at least for the next few months. The newly confirmed Federal Housing Finance Agency director has announced that he will postpone defer fees on Fannie Mae and Freddie Mac-backed loans at least through April 1.

“The FHFA will delay implementation of the [guarantee] fee and risk-based pricing plan…,” said incoming chief Mel Watt last Friday in a statement, “until such time as I have had the opportunity to evaluate fully the rationale for the plan and the plan’s likely impact on the [companies’] risk exposure, the cost and availability of credit and how the plan would interface with the qualified mortgage standards.”

The new fees, required by the FHFA in order to reduce financial risk to the government-run agencies would have gone into effect in some areas at the beginning of the year. Lenders will be charged higher guarantee fees, the cost of which would likely get passed on to borrowers. Homebuyers and refinancers would either have to pay a higher upfront fee or roll it into their loan, raising the interest rate by as much as 0.25 percent. “If these [policies] had been implemented, it would have increased borrowing costs dramatically,” said David Stevens, CEO of the Mortgage Bankers Association in a statement.

Stevens says the fee hikes don’t make much sense anyway. Fannie and Freddie’s profits have been soaring over the past year. Plus loans made in the years since the mortgage meltdown have been much safer and more conservative, making for fewer losses for the two companies. “The GSEs are making a lot of money,” said Stevens. “There’s no rationale for the increases.”

Watt left the future of the fees up in the air, which could be a big break for a mortgage market already bracing itself for higher interest rates this year as the Federal Reserve tapers its stimulus program. Mortgage are still going to be pricier in 2014, but at least not quite as expensive as they could have been.


About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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