Watt postpones proposed FHFA fee increases

Mel Watt wastes little time putting his stamp on housing policy, saying he will delay the increase in mortgage fees announced earlier this month by the FHFA - the regulatory agency overseeing Fannie Mae (FNMA) and Freddie Mac (FMCC). Watt was confirmed to lead the FHFA on December 10 and is set to be sworn in on January 6.

The move to boost fees - which would have led to significantly higher rates and/or points to those with anything but perfect credit and 20% to put down - was part of a plan by outgoing chief Ed DeMarco to allow room for money from private investors into the mortgage market. Needless to say, it had come under strong attack from those whose bread is buttered by the current regime. "The timing of it is impeccably bad," said Lew Ranieri. "All this will do is tighten credit. You're just making housing less affordable."

"What our industry keeps pushing for is let's do things at a slow pace to make sure there's not some unintended consequence," said KB Home (KBH) CEO Jeff Mezger on the company's earnings call (transcript) this week (before Watt nixed the fee increase). "If you're a 750 FICO, this [extra fee] is 1/8 of a percentage point, so it's not a big deal. You get down to a 650 or a 670 or 680 - which historically is a good buyer - and your interest rate could go up 1%."

"There's a new head of FHFA coming in," continued Mezger. "They'll have the ability to go adjust and monitor things." Indeed.

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Comments (13)
  • SteeleTek
    , contributor
    Comment (1) | Send Message
    Will this have any effect on FNMA / FMCC ?
    21 Dec 2013, 11:01 PM Reply Like
  • jmekari
    , contributor
    Comments (9) | Send Message
    Positive impact would be my guess. The volume of loans written will not decline as the 1% fee is postponed. All the fee increase does is make it less affordable for the middle class home buyer.
    22 Dec 2013, 05:22 AM Reply Like
  • jmekari
    , contributor
    Comments (9) | Send Message
    If I had to guess, good news because the volume of loans written now will not be impacted by the 1 point fee hike to the a average home buyer.
    22 Dec 2013, 05:22 AM Reply Like
  • gregnazar
    , contributor
    Comments (4) | Send Message
    further it makes it less likely that the private sector will step into the market as Demarco had planned. This will make the dependancy on the GSC's stronger
    22 Dec 2013, 11:20 AM Reply Like
  • dogety
    , contributor
    Comments (787) | Send Message
    Possibly tie it to CPI increases, 0 - 3% no fee, 3.1 - 7% a graduated fee schedule - grandfathered in from a set date. This way, if the economy is bad - NO fee. When we work - we pay, when we don't, well!


    Could also add a temporary fee of 0.1% to ALL outstanding (non defaulted FNMA / FMCC loans) - for a period of three years using the same criteria as above to fully fund the program! This fee schedule to be extended for one / two additional year by act of Congress??
    22 Dec 2013, 06:20 PM Reply Like
  • rambler1
    , contributor
    Comments (1024) | Send Message
    What a liberal jerk. Doesn't learn a lesson from less than 10 years ago.
    21 Dec 2013, 11:15 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13495) | Send Message
    It is a shame. The only way Fannie Mae and Freddie Mac can become anything close to a legitimate entity they must charge something approximating the multi-trillion dollar in risk and liabilities they own. Preventing this stops it from taking even an iota of the steps they need to do that.


    Likewise, this still doesn't stop moves to prevent people from buying who can't afford to. There is still tightening restrictions on buying. However, the peddling to those who can't afford to buy still goes on through government 3.5% to no down programs supported by HUD and others in the name of helping but in reality just helping backs transfer really bad property to others to take the loss yet again.


    Liberal real estate programs designed by the real estate industry and peddled to politicians with fat lobbyist money are ruining the very people they are suppose to help.
    23 Dec 2013, 02:51 AM Reply Like
  • DougRk
    , contributor
    Comments (1902) | Send Message
    If there's any industry where private money needs to be in control this is it. For the love of God, please get the govt entirely out of the mortgage biz. You almost brought the entire financial system to ruin with your meddling and do-gooder garbage!
    22 Dec 2013, 12:25 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11225) | Send Message
    "We are from the government and we are here to help."
    22 Dec 2013, 08:30 AM Reply Like
  • Daniel B. Smith
    , contributor
    Comments (10) | Send Message
    Good job Mel, the new fees were nothing less than criminal. Mortgage business is hard enough with all the Dodd-Frank regulation, QM Rules, Appraisal changes and disclosure requirements, New fees from the GSE'S and FHA, G-Fees, fed tapering…...and the consumer is absolutely blind these issues!
    22 Dec 2013, 09:53 AM Reply Like
  • AllStreets
    , contributor
    Comments (1483) | Send Message
    The last thing that this economy and housing sector needs is an increase in borrower fees, hence even tighter mortgage credit. Most people have no idea that the entire financial crisis was directly due to excessive and ill-timed massive changes in mortgage regulations imposed by a complete consortium the bank regulators in the form of the "Interagency Guidance on Nontraditional Mortgage Product Risks," dated September 26, 2006 and formally issued on October 6, 2006. The Guidance would almost immediately radically contract mortgage financing in the US, directly ensure a subprime mortgage crisis, a prime mortgage crisis, a second mortgage crisis for banks, a housing crisis and a recession. Mortgage qualifications have tightened and costs to borrowers have escalated almost continuously since (other than basic interest rates). Another leg of mortgage crisis is entirely possible due to the ongoing expiration of 10-year interest only periods on millions of legacy ARMs and HELOCs from the 2003-2006 period.
    22 Dec 2013, 10:35 AM Reply Like
  • Palenque
    , contributor
    Comments (395) | Send Message
    I got this in the mail. please copy it and mail it to your contact list


    Subject:The Ultimate Attack On Middle Class:
    Killing Fannie Mae and Freddie Mac


    The big banks are about to still $30,000 from each
    average American family and here is how it works.


    Once again Government is on the side of the big banks!
    On Aug 6 the White House announced that it supports
    a bill in Congress that aims to wind down Fannie Mae
    and Freddie Mae.


    Who are Fannie and Freddie?


    Fannie and Freddie are government sponsored and
    regulated corporations charged with the task of
    provide liquidity in the secondary mortgage market.
    In simple words these companies buy the loans that
    your local banks lend to you. In this way the banks
    free up their money and can offer new credits to the
    community while keeping the rates low.
    Who created this companies and what for?
    Fannie Mae was created in 1938 by Franklin Delano
    Roosevelt in order to propel the housing market out
    of the depression because the banks were reluctant to
    lend their own money at their own risk on mortgages.
    The same thing happens right now.
    The big banks were bailed out by Government in the
    recent crisis and were given hundred of billions .
    However the banks used the bail out money for their
    speculative investments rather than for loans to the


    What happened during the crisis?


    Maybe you heard that these two companies were bailed
    out by the government. The true is that the government
    took over the companies and lend them 188 billions that
    they didn’t need. Instead the US Treasury directed
    them to use the money to buy the toxic assets of the big
    banks. So Fannie and Freddie on behalf of the taxpayers
    bought the bad assets of following banks: Bank of America,
    JP Morgan, Wells Fargo Suntrust Deutzche Bank etc etc.
    It means that the government not only lend money to these
    banks but also helped them to get rid of their bad assets
    using Fannie and Freddie.
    In the last five years only Fannie and Freddie have been
    supporting the housing market buying the mortgages
    originated by banks because private investors flew
    away from genuine investments that create jobs.


    The truth upside down: The good guys are blamed
    and the bad guys are the heroes


    After the great clean up of subprime loans that caused
    the financial crisis a new healthy and safe mortgage
    market is coming up.
    The big banks are now trying to control this new market.
    For that purpose they hire media and lobby the Congress
    to wind down F n F. They are using the moto
    “Fanie and Freddie left the taxpayers on the hook”.
    Actually it is exactly the opposite because the money lend
    by Treasury was used entirely for buying the nonperforming
    loans from the big banks mentioned above.
    Besides Fannie Freddie already paid back 100%
    and are on the way to deliver huge profits to taxpayers.


    What does it mean for you?


    If Fannie and Freddie are wound down the mortgage
    market will be left in the hands of the big banks.
    The credit unions and local banks will depend on them
    to sell their loans on the secondary market. In other words
    they will be left out of the mortgage business.
    The fees will go up to 1% regardless of the rate and that
    1% result in about 30,000 over a period of 30 years.
    It means that you will pay a thousand dollars more per year.
    If you already have a mortgage your pain will come
    at the time you want to sell your house because the
    more expensive mortgages will keep prices down.
    (not to mention the jobs that will be destroyed!)


    Stand for the American Dream! Call your congressman
    Send them an email saying that you want Fannie and
    Freddie to stay.
    Forward this email to your contacts because most of
    the people is not aware of this issue.
    Don’t Kill Home Ownership
    Restore Fannie Mae and Freddie Mac
    22 Dec 2013, 04:43 PM Reply Like
  • dlehnecke@nvusd.k12.ca.us
    , contributor
    Comments (28) | Send Message
    Politicians are blowing smoke with Corker/Warner "wind down" rhetoric and the hedge/mutual funds know it. If your long on fnma or FMCC you'll likely be greatly rewarded. The only question is how long is the govt. going to keep them under conservatorship, ultimately a time-value of money question for investors.
    22 Dec 2013, 10:38 PM Reply Like
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