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FHFA Will Reduce GSE Loan Limits and Hike G-Fees

OCT 24, 2013 5:38pm ET
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Federal Housing Finance Agency acting director Edward DeMarco signaled that he plans to reduce the GSE loan limits and he will reveal the changes in November.

“We expect to give market participants at least six months’ notice of any change. Any reduction would be across the board, not just in some parts of the country,” he said Thursday.

DeMarco also said he plans to continue making gradual increases in the guarantee fees that Fannie Mae and Freddie Mac charge lenders.

The current 50 basis point g-fee has doubled since Fannie and Freddie were placed in conservatorship in 2008.

Lowering the loan limits is “one of the most direct ways” to increase private sector participation in the mortgage market and “reduce taxpayer exposure,” he said at a Zillow/Bipartisan Policy Center conference in Washington.

Members of the House and Senate contend that the FHFA does not have the authority to reduce the loan limits without congressional approval.

But DeMarco maintains his actions are consistent with his responsibilities as a conservator when it comes to gradually shrinking the GSEs’ dominant presence in the mortgage market.

Comments (5)
Actually, loweing the loan limits is the most direct way to skew and depress home prices.
Posted by Boris Badinoff | Friday, October 25 2013 at 7:40AM ET
and why are they still in conservatorship!!!!
Posted by Linda F | Friday, October 25 2013 at 3:51PM ET
and why are they still in conservatorship!!!!
Posted by Linda F | Friday, October 25 2013 at 3:51PM ET
So they're lowering loan amounts and raising fees. I assume our congress won't let them do this since they are generally against raising fees/taxes (which is what this is). And I agree it will shrink the lending marketplace or drive more customers to the big banks.
Posted by DAVE S | Friday, October 25 2013 at 5:41PM ET
His authority is derived just like everybody's authority in the Obama administration, because he says he has it.
Time for a change?
Posted by WILLIAM R | Friday, October 25 2013 at 10:39PM ET
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