Republican lawmakers defend mortgage fee increases

Three Republican lawmakers spoke out on Wednesday in defense of mortgage fee hikes that were announced by the Federal Housing Finance Agency last month but later delayed by the agency’s new director.

In December, the agency said that fees for certain Fannie Mae and Freddie Mac-backed loans would rise sharply, a move that would result in higher mortgage rates for many borrowers. The fee increases, the agency said, would affect loans made to borrowers with spotty credit history or those not making sizeable down payments.

But the agency’s new director Mel Watt said Wednesday that the fee increases would be delayed pending further study, the Wall Street Journal reported.

Watt’s decision was criticized by three Republican lawmakers — Representatives Scott Garrett of New Jersey, Randy Neugebauer of Texas and John Campbell of California – who said in a letter seen by the Journal that the fee increases would protect against potential subsidies to risky borrowers.

An FHFA spokesperson declined to comment to the Journal about the letter.

The same lawmakers had, in 2010, criticized a similar fee hike, the paper said. But a spokesperson for Garrett said that the fee increases were now necessary “given that four years have passed and private capital still has not re-entered the space in a meaningful way.” [WSJ] – Hiten Samtani