New FHFA director stops rate hikes short
MBA welcomes Watt's decision
The Mortgage Bankers Association is welcoming the announcement from incoming Federal Housing Finance Agency Director Rep. Mel Watt, D-N.C., that he will be postponing planned increases in fees at Fannie Mae and Freddie Mac.
Watt – who will be sworn in on Jan. 6 – announced on Friday that he will delay mortgage fee increases until he has time to fully evaluate the reasoning behind the plan.
Last week, Fannie and Freddie – at the behest of FHFA – announced there will be a 10 basis point increase charged to borrowers with mid-range or below credit scores and who don’t meet down payment criteria. Fannie and Freddie issued the directives at the instruction of the FHFA.
Such an increase would amount to a roughly $4,000 increase in interest on a 30-year, $200,000 mortgage, or about $11.11 per month.
"We were surprised by the announcement of the g-fee hikes from (outgoing acting FHFA director) Ed Demarco, right on the cusp of the new QM rule, loan limit changes at the FHA and apparent slowing home sales," MBA CEO and president David Stevens said Monday afternoon. "The decision by Mel (Watt) was the only decision to be made given the GSEs are making such huge profits."
Watt’s announcement on Friday said that he will be reviewing the proposed hikes, but there was no indication on what factors he would overrule or proceed with any rate hikes.
"Upon being sworn in as Director of the Federal Housing Finance Agency, I intend to announce that the FHFA will delay implementation of the g-fee and risk-based pricing plan announced in the FHFA's news release dated December 9, 2013 (and detailed more fully in the Loan-Level Price Adjustment Matrix released earlier this week) 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 GSE's risk exposure, the cost and availability of credit and how the plan would interface with the qualified mortgage standards,” Watt said in a written statement.
Watt was traveling in his district Monday and could not be reached for comment.
A statement from his office said, "I do not expect to elaborate further on this statement until after I have been sworn in as director of the FHFA in January. However, I felt that it was important to announce my intentions now because of the prospect that some lenders could start to price the announced changes into the market well before the effective dates of the changes outlined in the FHFA's December 9, 2013 news release."