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Tag Archives: Guarantee Fees

Freddie Mac Speaks: G-Fees and CRT

Kevin Palmer, SVP of Single-Family Credit Risk Transfer at Freddie Mac, on how credit risk transfers are indicating whether Freddie's Guarantee fees are in line with what the private market would charge.

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Freddie Mac Perspectives Blog: G-Fees and CRT

In a Freddie Mac Perspectives blog, Kevin Palmer, SVP of Single-Family Credit Risk Transfer, explained how credit risk transfers and Guarantee fees have much more in common that one might think—one gives Freddie Mac significant insight into the other.

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Average Guarantee Fees on GSE Loans Are Two and a Half Times Their 2009 Level

According to the FHFA report, the average level of guarantee fees charged has increased since 2009, when the report began. The guarantee fees are now two-and-a-half times their previous level from 2009 to 2014. The average fees increased from 22 basis points to 58 basis points from 2009 to 2014. From 2013 to 2014, average fees increased from 51 basis points to 58 basis points.

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FHFA: Current G-Fees Are at an Appropriate Level, Only Modest Adjustments Needed

When considering adjustments to G-fees for certain categories of loans, FHFA took into account the decision (also announced Friday) to enhance the eligibility standards for mortgage insurance companies. Overall, the FHFA said, the modest changes being made to the upfront G-fees are revenue neutral and will mean little or no change for Fannie Mae and Freddie Mac.

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FHFA Announces Increase in Guarantee Fees

The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to raise their guarantee fees (g-fees). The g-fee increase consists of three components: the base fee for all mortgages will increase 10 basis points; the g-fee grid will be updated to ensure pricing is aligned with credit risk; and the adverse market fee of 25 basis points is being eliminated except in four states where foreclosure carrying costs are exponentially high.

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Barclays: Non-Agency RMBS Market to Make a Small Comeback

Barclays forecast new non-agency RMBS issuance at $12 to $15 billion at the start of the year, and its latest research shows the market is on track to hit that mark. Contributing to that forecast are a few factors: First, Barclays notes, the capital costs of holding loans in portfolio will increase for many banks under Basel III, making securitization a more attractive proposition. Second, further hikes in guarantee fees (g-fees)--such as those mandated by the Federal Housing Finance Agency (FHFA)--could make for a more competitive private-label market.

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MBA Proposes ‘Up-Front Risk Sharing’ Concept for Mortgage Market

The Mortgage Bankers Association (MBA) shared a proposal to bring private capital back into the mortgage market while decreasing costs for taxpayers and borrowers. In a recent paper, the MBA explained the up-front risking sharing concept, which calls for the GSEs to offer risk-sharing at the front end of transactions. The proposal also suggested Fannie Mae and Freddie Mac should accept loans with ""deeper levels of credit enhancement"" in exchange for reduced guarantee fees and other loan level charges.

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Fitch Sees Potential in FHFA’s Goals to Attract Private Capital

The goal of attracting private capital into the mortgage market is at the center of discussions throughout the industry and the government. Thus far, ""efforts by the Federal Housing Finance Administration and other federal agencies to provide incentives for the creation of a vibrant private mortgage securitization market have been largely unsuccessful,"" according to Fitch Ratings. However, the ratings agency does see some promise in a couple of FHFA's goals.

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KBW Expects ‘Modest Changes’ in Mortgage Market in New Year

Keefe, Bruyette & Woods (KBW) a boutique investment bank and broker-dealer, recently released its predictions for the mortgage market for the year 2013, entitled Watching Grass Grow: Mortgage Reform in 2013. As the title implies, KBW does not expect major changes in the New Year. However the investment bank does expect some ""modest changes in the mortgage landscape driven by the Federal Housing Finance Agency (FHFA).""

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