Four out of the five states where the Federal Housing Finance Agency is considering an increase in mortgage guarantee fees do not have healthy housing markets, NAFCU General Counsel Carrie Hunt said Wednesday in a letter to the agency.
As a result, NAFCU said it strongly opposes the FHFA’s plan to increase guarantee fees to between 15 and 30 basis points.
The fees, proposed for mortgages originated in Connecticut, Florida, Illinois, New Jersey and New York, are intended to allow the GSEs to recover foreclosure costs. Of the five states, only in Florida are housing markets improving, Hunt said.
“Imposing additional cost to borrowing, especially on those borrowers who are creditworthy and ready to enter or re-enter the housing market, is both unfair to those borrowers and potentially damaging to housing market in those states,” Hunt said.
The NAFCU attorney proposed the FHFA should withhold any guarantee fee increases until stable agency- and non-agency secondary markets have been established.
“To achieve this stage, Congress and the Administration should work together to reform the housing finance market. In the meantime, however, the FHFA should not take any actions that would create unnecessary obstacles to the recovery of the housing market,” Hunt wrote in her letter.