New FHFA Head moves to delay fee increases

According to the Wall Street Journal’s Nick Timiraos, Rep. Mel Watt (D., N.C.), the incoming director of the regulatory agency that oversees Fannie Mae and Freddie Mac, said on Friday night he would delay an increase in mortgage fees charged by the housing-finance giants, which was announced earlier this month by that agency.

Upon being sworn in, “I intend to announce that the FHFA will delay implementation of the loan-fee increases until such time as I have had the opportunity to evaluate fully the rationale for the plan,” said Mr. Watt in a statement.

Earlier this month the FHFA said it would increase certain fees charged by Fannie and Freddie that are typically passed on to mortgage borrowers, and this week Fannie and Freddie unveiled specifics about the proposed increases, which would sharply raise certain fees charged to borrowers who don’t have perfect credit scores or substantial down payments. Fannie and Freddie issued the directives at the instruction of the FHFA.

In a statement emailed to reporters on Friday night, Mr. Watt said he wanted to study the plan’s “likely impact on the [companies’] risk exposure, the cost and availability of credit and how the plan would interface” with forthcoming Dodd-Frank mortgage regulations set to take effect next month.

Mr. Watt said he didn’t plan to elaborate further until after he is sworn in but that “it was important to announce my intentions now” because lenders could begin to implement the fee increases in the coming weeks. The fee increases take effect in March.

The fee increases largely took the housing industry by surprise and generated significant opposition from real-estate groups, including the National Association of Realtors and the National Association of Federal Credit Unions. Raising fees on borrowers with credit scores up to 760 is “impossible to justify,” said Martin Eakes, chief executive of the Center for Responsible Lending in Durham, N.C., a consumer-advocacy nonprofit, in an interview Tuesday.

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or [email protected].

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.