Washington DC 12/29/11. FHFA Acting Director Edward J. Demarco announced today an
increase of “no less than 10 basis points” in the guarantee fees charged by
Fannie Mae and Freddie Mac (GSEs). The increase is part of the recently
enacted “Temporary Payroll Tax Cut Continuation of 2011”. Effective April 1, 2012 through
October 1, 2021, the increase will effect residential mortgage financing. Guarantee fees are paid to the GSEs and held in reserve. Going forward the increase will be remitted directly to the US
Treasury.
Extending the 10 basis point increase over the FHFA’s current book of business translates into
$5.7 billion in additional transaction costs to be borne by the already
challenged housing finance sector. The 10 basis point increase is not a fee for a service or a product, it is a tax plain and simple - money taken from the private sector and paid to the US Treasury.
