Rep. Randy Neugebauer, the new chairman of the House Financial Services Oversight Subcommittee, believes the guarantee fees Fannie Mae and Freddie Mac charge its seller/servicers are underpriced and should be increased.
Speaking at a University of Maryland forum on the future of the GSEs, the Texas Republican gave a broad overview of how he would like to put most of the housing market in the hands of the private sector.
Without giving specific price targets, he said g-fees are currently "under market" and clarified later to reporters that "they should be increased gradually." (In general, seller/servicers pay g-fees of 20 basis points or more per loan, though it can vary from lender to lender.)
He also said GSE loan limits should be decreased and that jumbo securitizers would fill the void.
But during a Q&A with the audience, one loan officer who works the Northern Virginia market told the Congressman that if the $729,750 loan limit is lowered in the Washington, D.C. metro area it would potentially halt homes sales. (The LO works for a top five ranked funder.)
Neugebauer raised the issue of "when the best time is to start the process," adding that "we need to establish the principles and rules now and let the market build to it."
A former home builder and mortgage executive, the Congressman said he believes in a "private sector" solution to the GSEs, saying at some point investors "will buy residential mortgages again," hinting that one way to get them to purchase product is by offering a higher yield.
The Texas Republican also said that in his opinion the government is wasting its time with loan modification programs and that such foreclosure prevention programs should "stop right now." He told National Mortgage News, however, that it's fine for servicers to continue with their private sector mods. "HAMP," he said is "just postponing the inevitable."
