Incoming FHFA Director Wants to Hold Off on Fee Increases

The incoming director of the regulatory agency that oversees Fannie Mae and Freddie Mac said he would delay the planned 2014 increase in mortgage fees on government-backed loans.

U.S. Congressman Mel Watt, D-N.C., expects to be sworn in as the new director of the Federal Housing Finance Agency (FHFA) on Jan. 6 and said in a statement released on Friday that he is postponing the increase in guaranteed fees “until such time as I have had the opportunity to evaluate fully the rationale for the plan and the plan’s impact.”

The FHFA announced earlier this month a plan to raise fees charged by Fannie and Freddie that are typically passed on to mortgage borrowers in the form of higher interest rates. The fees would vary depending on the borrower’s credit score and down payment amount, and would have hit hardest on mortgage applicants with a credit score ranging from 700 to 759 and less than 20 percent down.

The increase was an effort to raise the cost of Fannie- and Freddie-backed loans so a private mortgage market can develop. The two companies backed 63.4 percent of all mortgage originations in 2012. The government-sponsored enterprises (GSEs) were seized by the government during the height of the housing crash in 2008, and taxpayers provided $187.5 billion in bailout funds. The GSEs have since paid back $185.2 billion in dividends.