The National Association of Federal Credit Unions (NAFCU) is not happy about the coming hike in guarantee fees, and they are letting the Federal Housing Finance Agency know about it.
Dan Berger, President and CEO of NAFCU, said in a strongly worded letter that FHFA’s plan to increase guarantee fees by 10 basis points on new Fannie Mae and Freddie Mac business, will hurt NAFCU’s members.
Fannie Mae and Freddie Mac announced the hike on Dec. 9, under the direction of the FHFA. The base g-fee, or ongoing g-fee, for all mortgages will increase by 10 basis points. This represents an average increase of 14 basis points on typical 30-year mortgages and 4 basis points on 15-year mortgages, according to the FHFA.
The hike will be implemented over the next 2-3 months. The changes come following the findings of the annual report from the FHFA. According to a Bank of America Merrill Lynch (BAC) analyst, g-fees could have risen by up to 50 points.
"NAFCU strongly opposes these changes and urges the Federal Housing Finance Agency to reverse course," Berger said in an open letter to the FHFA. "NAFCU does not believe that these actions are appropriate because the cost of borrowing will greatly increase and lending will inevitably slow down."
"While we recognize that the housing market is recovering, it is important that the FHFA considers that there are many indicators showing a slowdown in the recovery," Berger wrote. "For example, applications for purchase transactions have decreased by 10 percent from the 3rd quarter in 2012 to the same time this year. During the same period, lenders have seen over 50 percent fewer mortgage applications, including refinancings. Further, and crucially, many lenders, including a vast majority of NAFCU member credit unions, do not plan to extend mortgages that do not meet the definition of ‘qualified mortgage."
Berger said that NAFCU is convinced that these changes will have an adverse impact on the nation’s credit unions and their 97 million members.