The average guarantee fee (g-fee) charged by Fannie Mae and Freddie Mac rose in 2010 compared to 2009, from 22 basis points to 26 basis points, the Federal Housing Finance Agency (FHFA) reports. Release of the study, which the Housing and Economic Recovery Act of 2008 requires the FHFA to perform, comes days after FHFA Acting Director Edward DeMarco intimated that the agency will gradually increase g-fees next year.
The FHFA's report also shows that the government-sponsored enterprises' (GSEs) g-fees continued to convey cross-subsidies from mortgages that posed lower credit risk, on average, to loans that posed higher credit risk. However, the FHFA says that cross-subsidization was substantially less in 2009 and 2010 than it was in 2007 or 2008.
Lenders that delivered smaller volumes of mortgages to the GSEs, on average, paid higher g-fees on loans of similar credit quality than did larger-volume lenders, the report finds.
"In prior years, the largest lenders typically entered into semi-annual or annual contracts, whereas ongoing guarantee fees established for smaller customers may have had shorter terms and allowed for more frequent changes of the terms," the report says. "Recent contracts often included shorter pricing terms."
In his comments earlier this week, DeMarco stated that lender-specific, volume-based price breaks might go the way of the dodo.