The Federal Housing Finance Agency (FHFA) has implemented a policy requiring Fannie Mae and Freddie Mac to increase guarantee fees on closed loans purchased.
The amount of G Fee increase will be based on the state and municipality where the property has been purchased. FHFA’s reasoning is that certain locations have legislation in place making it more cumbersome and time consuming for lenders to foreclose on delinquent borrowers. An example would be states that require judicial foreclosure. Increasing G Fees is designed to offset the greater expense of foreclosures to Fannie and Freddie. FHFA has a stated goal to lower government exposure to losses suffered by GSE’s (Government Sponsored Entities, FNMA, FHLMC, and GNMA). Since G Fees are an expense to the originating lender, the fee increase will be reflected in interest rates charged to home buyers.Nevertheless, rates are still at all time lows.
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