The average fee Fannie Mae and Freddie Mac charge lenders for guaranteeing principal and interest payments on mortgage-backed securities increased to 26 basis points in 2010 from 22 bps the year before, according to the Federal Housing Finance Agency. The regulator said in its third annual report that the government-sponsored enterprises continued to subsidize higher credit risk loans with revenues from safer mortgages. However, researchers found the amount needed to offset riskier loans in 2009 and 2010 was substantially less than in 2007 or 2008. In March 2008, the GSEs implemented an upfront charge of 25 bps intended to protect against any adverse market or deteriorating housing conditions. That same month, the mortgage finance giants introduced additional fees based on loan-to-value ratios, credit scores and other factors. The FHFA found the 2010 increase stemmed from pricing increases began in 2009. Fannie and Freddie often experience gaps between the estimated total revenues from the guarantee fee and the eventual cost of the loan should it default. A negative gap does not mean the GSE expects to lose money but that it does not expect to earn as much as it previously estimated. According to the FHFA study, the gaps improved along all product categories for the GSEs, due the higher charged fees and lower costs, especially on adjustable-rate mortgages. Still, the GSEs did not expect to hit their target earnings on loans with credit scores below 660 in 2009 and 2010, further evidence of tightened lending to borrowers with a less-than-pristine credit history. FHFA Acting Director Edward DeMarco this week said g-fees would be going up in 2012 as part of a broader effort to share risk with the private sector. The two firms currently owe the Treasury Department roughly $142 billion in bailouts. "Increasing the g-fees is designed to make sure that if there are any losses from the emergency actions we took to put out the financial fires in 2008 that we recover those losses in the form of a fee," Treasury Secretary Timothy Geithner said during a White House press conference Monday. Smaller lenders paid higher fees for the guarantee in previous years, but DeMarco noted that when the g-fees go up next year, volume discounts will not be given. The FHFA study released Friday explained why, stating a significant share of the mortgages acquired by Fannie and Freddie came from a small group of large lenders. Loans acquired from the top 10 lenders in 2010 accounted for 76% of combined GSE volume last year, up from 74% in 2009. Write to Jon Prior. Follow him on Twitter @JonAPrior