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GSE Guarantee Fee Hike Coming April 1

DEC 29, 2011 12:31pm ET
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The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to implement a congressionally mandated increase in their loan guarantee fees on April 1. 

The initial loan guarantee hike will be 10 basis points.  But additional g-fee increases may be coming, according to FHFA acting director Edward DeMarco. 

The payroll tax cut extension bill passed by Congress on Dec. 23 requires that GSEs charge an average g-fee in 2012 of at least 10 bps higher than in 2011. 

"In early 2012, FHFA will further analyze whether additional guarantee fee increases are appropriate to ensure the new requirements are being met," DeMarco said Thursday morning. 

The lawmakers relied on a 10-year increase in Fannie and Freddie g-fees to cover most of the costs of the legislation that extended the payroll tax reduction along with unemployment benefits for two months. 

The bill also directs the GSE regulator to adjust the g-fees so all lenders pay the same fee. 

A recent FHFA report shows the 10 largest customers of Fannie and Freddie paid an average g-fee of 23 basis points in 2010. 

The next tier of Fannie and Freddie's customers (ranked 11 through 90) paid an average g-fee of 27 basis points in 2010. 

The legislation gives FHFA two years to implement a uniform fee structure. 

"FHFA will announce plans for further guarantee fee increases or other fee adjustments that will then be implemented gradually over the two-year implementation window, taking into consideration risk levels and conditions in financial markets," Demarco said.  

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