Expect Fannie, Freddie to Post Strong Profits for Years

Raising guarantee fees on Fannie Mae and Freddie Mac loans will provide “strong support” for their profitability, according to Moody’s Investors Service.

But hiking the g-fees by another 10 basis points will do little in terms of reviving the private-label mortgage market.

The Federal Housing Finance Agency is expected to announce soon that it will raise the GSEs’ guarantee fees. However, the increases are not expected to go into effect until next spring or summer.

Fannie currently charges lenders a 57 basis point guarantee fee and Freddie charges a 51 basis point g-fee.

“The immediate effect of additional guarantee-fee increase would be to strengthen the GSEs profitability further, since we expect it would take a large increase in guarantee fees before a material amount of private capital entered the mortgage market,” Moody’s says in a “Credit Focus” report.