Illinois Attorney General Lisa Madigan joins other state AGs in their public pushback against hikes on guarantee-fees on mortgages acquired by Fannie Mae and Freddie Mac.
The proposed g-fee increases, which were announced by the Federal Housing Finance Agency, would raise g-fees in five states to cover the higher costs associated with longer mortgage default processes in certain jurisdictions.
State leaders in the impacted states of Illinois, Connecticut, Florida, New Jersey and New York responded swiftly to the proposal.
Illinois AG Lisa Madigan voiced her dissent in a letter to the FHFA this week. AGs in Connecticut and New York have already pushed back against the proposed g-fee hike.
Madigan argues the plan would create higher costs for borrowers or encourage local leadership to take away default protections that are part of the current default process.
“If FHFA’s proposal is adopted, Illinois homeowners will inevitably pay a steep price – through higher interest rates or diminished legal protections for borrowers,” Madigan said. “Either way, it’s a lose-lose situation for homeowners.”
Some estimates from the Royal Bank of Scotland (RBS) suggest the increase could add as much as $100 to annual mortgage payments in the impacted states.
Connecticut lawmakers recently sent the FHFA a letter warning that the change could cause a 20-basis point fee hike in the Northeast state.