The GSE regulator wants Fannie Mae and Freddie to charge extra
Under a new proposal from the Federal Housing Finance Agency, borrowers in Connecticut, Florida, Illinois, New Jersey and New York would pay an extra 15 to 30 basis points in upfront fees.
The agency notes, “Lenders may pass an upfront fee through to a borrower as an adjustment to the interest rate on the borrower’s loan.”
FHFA acting director Edward DeMarco is seeking public comments for 60 days before incorporating the hikes.
“The planned approach focuses on a small number of states that have expected total-related carry costs that significantly exceed the national average, and thus cause the greatest increase in average loss,” the FHFA says in a Federal Register notice.
FHFA evaluated the foreclosure costs in all 50 states. The agency found that New York had the highest foreclosure costs in the nation, Virginia the lowest. It takes 820 days to complete a foreclosure and secure a marketable title to the property in New York compared 270 days in Virginia.
New Jersey, Puerto Rico and Connecticut ranked second, third and fourth, respectively, at 750, 720 and 690 days.
As the conservator of Fannie and Freddie, the FHFA says it has a “statutory obligation” to ensure the GSEs are adequately compensated for the actual credit losses they experience.
Illinois borrowers would pay an extra 15-bp upfront fee. Florida, Connecticut and New Jersey borrowers would pay an extra 20-bp upfront fee. New York borrowers would pay a 30-bp fee under the GSE regulator’s plan.
On a $200,000 mortgage, the FHFA estimates the new fees (ranging from 15 bps to 30 bps) would increase the borrower’s month payment by $3.50 to $7.
