Fannie, Freddie throw a bone to competitors with hiked fees

Prompted by regulator the Federal Housing Finance Agency, mortgage finance companies Fannie Mae and Freddie Mac are raising the fees they charge lenders in an attempt to make non-government-backed lending more competitive.

The resulting increases will make a 30-year mortgage for a borrower with a 735 credit score and 10 percent down payment pay 2 percent of the total loan amount in fees, up from 0.75 percent currently. Borrowers making that same down payment who have a credit score of 750 would see the fees jump from 0.5 percent to 1.5 percent of the total loan, and for borrowers with a 775 score, the initial fee would be 1 percent, up from 0.5 percent.

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Even borrowers who make heftier down payments could see increased fees, such as a jump to 2.25 percent from 1.5 percent for a borrower with a 690 credit score and 25 percent down payment.

And the increase, a senior FHFA official said Tuesday, isn’t even as high as a private investor would demand for a traditional rate of return.

“It’s another headwind for housing on top of other headwinds that, individually, might have been manageable,” Ivy Zelman, CEO of housing research firm Zelman & Associates, told the Journal. But combined with rising interest rates and shifting mortgage regulations, the increased fees could tighten mortgage credit next year, housing analysts said. [WSJ]Julie Strickland