Rep. Mel Watt, D.-N.C., the incoming director of the regulatory agency that oversees Fannie Mae and Freddie Mac, announced late Friday that he would delay an increase in mortgage fees charged by the housing-finance giants, which was announced earlier this month by that agency.
Watt is set to be sworn in as the director of the Federal Housing Finance Agency on Jan. 6 after being confirmed by the Senate on Dec. 10.
The fee increases, announced by the FHFA on the eve of Watt’s confirmation, are set to take effect in March. The FHFA had said it wanted Fannie and Freddie to hike fees that the companies charge to lenders — those increases are likely to be passed along to borrowers in the form of higher mortgage rates — in order to make it easier for private investors to compete with the mortgage-finance giants.
Here’s Watt’s full statement released on Dec. 20:
Upon being sworn in as director of the Federal Housing Finance Agency, I intend to announce that the FHFA will delay implementation of the [guarantee] 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 [companies’] risk exposure, the cost and availability of credit and how the plan would interface with the qualified mortgage standards.
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.
The extent of the fee changes announced by Fannie and Freddie took the industry by surprise last week because they would sharply increase upfront fees on borrowers with less than perfect credit scores or without significant down payments. The FHFA had earlier announced an across-the-board fee increase that would take effect in March, together with higher fees in four states — New York, New Jersey, Connecticut and Florida — where banks have taken longer to process foreclosures, raising costs to mortgage investors.
Source: MSN Real Estate