The Office of Federal Housing Enterprise Oversight started looking at the way Fannie Mae and Freddie Mac set loan guarantee fees for different sellers several months ago, according to a recently released letter to Congress."We have started to analyze the data to assess how the fees vary across sellers," OFHEO Director Armando Falcon Jr. says in an Oct. 27 letter to Rep. Richard Baker, R-La. The study is still under way, and there is no timetable for its completion, an OFHEO spokeswoman told MortgageWire. The two government-sponsored enterprises negotiate "g-fees" with their largest customers and generally offer fixed prices to their smaller customers. This disadvantage has prompted smaller sellers to form cooperatives or to use their trade groups to negotiate special deals. In the Oct. 27 letter, the OFHEO director comments that Fannie and Freddie are able to charge high g-fees due to their GSE status and to limited competition in the conforming loan market. "While the fees received prudently cover costs and provide essential risk protection, they also contribute to the Enterprises' unusually high rates of return," Mr. Falcon says.

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