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FHFA raises g-fees on GSE mortgages by 10 basis points

Fannie Mae and Freddie Mac will raise their guarantee fees charged to lenders by an average 10 basis points in order to encourage more private capital to fund the market, according to the Federal Housing Finance Agency.

"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 FHFA Acting Director Edward DeMarco.

For loans sold to the government-sponsored enterprises for cash, the higher fees go into effect Nov. 1. For others exchanged for mortgage bonds, the effective date is Dec. 1.

The FHFA said Friday the new raises will narrow the gap between what Fannie and Freddie charge lenders who deliver large volumes of loans with those who originate fewer.

The GSEs will also increase on mortgages with maturities longer than 15 years more than those home loans with shorter terms. This, the FHFA said, will reduce cross-subsidies between higher-risk and lower-risk mortgages.

Lenders paid an average 28 basis points in 2011 for Fannie and Freddie to guarantee their loans in the bonds issued to investors, up from 26 bps the year before, according to a report released by the FHFA Friday.

The GSEs raised their fees by 10 basis points in April in order to pay for a tax cut passed by Congress in December. But before the enactment, the FHFA pledged to raise the fees through 2012 in order to allow private issuers room to compete.

The FHFA said Friday the new raises will narrow the gap between what Fannie and Freddie charge lenders who deliver large volumes of loans with those who originate fewer.

The GSEs will also increase on mortgages with maturities longer than 15 years more than those home loans with shorter terms. This, the FHFA said, will reduce cross-subsidies between higher-risk and lower-risk mortgages.

jprior@housingwire.com

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