Ginnie Fee Proposal Rankles MBA

The Bush administration's proposal to charge a one-time, 6-basis-point upfront fee on each single-family and multifamily Ginnie Mae securitization has raised the hackles of the Mortgage Bankers Association."We are disappointed the administration is proposing a new fee on Ginnie Mae mortgage-backed securities' programs," MBA chairman Regina Lowrie said. ".... This new fee would affect affordability and have a significant impact on first-time homebuyers and minorities who rely on FHA loans to achieve homeownership." The president's fiscal year 2007 budget proposal would add $120 to the cost of originating a $200,000 mortgage. Issuers of Ginnie MBS currently pay a 6 bps guarantee fee. The new fee would increase securitization costs to 12 bps in the first year to cover $43 million that Ginnie pays annually for contractors and consultants. After operating expenses, Ginnie Mae generated net revenues of $737 million in fiscal year 2004 that went to the U.S. Treasury. The White House has to obtain congressional approval before imposing the new upfront fee on Ginnie Mae issuers.