FHFA: 2014 G-fees rose to 2.5 times greater than 2009 level

July 1, 2015

WASHINGTON (7/1/15)--Fannie Mae and Freddie Mac guarantee fees, otherwise known as g-fees, have increased by two-and-a-half times from 2009 to 2014, according to the Federal Housing Finance Agency’s (FHFA) 2014 single-family g-fees report. Released Tuesday, the annual report features an analysis of the costs of g-fees, and comparisons to previous years.

Fannie Mae and Freddie Mac acquire single-family loans from lenders and securitize them in the form of mortgage-backed securities. The enterprises guarantee timely payment of principal and interest to the investor, and as compensation for providing this guarantee, lenders are charged g-fees.

The FHFA’s report found that the average level of guarantee fees charged are currently two-and-a-half times their 2009 level, and from 2009 to 2014, average fees increased from 22 basis points to 58 basis points. From 2013 to 2014 alone, average fees increased from 51 basis points to 58 basis points.

The report also found:

  • In 2014, primarily because of changes in the models Fannie and Freddie use to estimate the capital necessary to support their mortgage guarantee business, gaps on 30-year fixed rate loans were more negative and gaps on 15-year loans were more positive than in 2013; and
  • The percentage of loans that Fannie and Freddie purchased from small lenders grew substantially in 2014, while pricing differences between small sellers and large sellers remained small.

The FHFA completed a comprehensive review of its g-fee policy in April, and decided not to change the general level of the fees. However, it did make certain minor and targeted fee adjustments.

 According to the report, those changes is “roughly” revenue neutral and will result in little or no change to most borrowers.