Fannie Mae, Freddie Mac Incoming Regulator Signals Policy Shift

NEW YORK (TheStreet) -- U.S. Representative Mel Watt (D., N.C.) soon-to-be-director of the Federal Housing Finance Agency, signaled last Friday that he may be reversing some of the recent changes announced by current acting director Edward DeMarco.

According to press reports, the Congressman said that when he is sworn in on Jan. 6, he would delay a recently announced hike in the guarantee fees charged by Fannie Mae (FNMA) and Freddie Mac (FMCC).

DeMarco had announced ahead of Watt's confirmation that beginning in March/April 2014, the guarantee fees or g-fee would rise by an average of 11 basis points overall, representing a 14 basis-point increase on typical 30-year mortgages and a 4 basis-point increase on 15-year mortgages. 100 basis points equal one percentage point.

The agency would also for the first time assess a higher fee for four states where foreclosure timelines are significantly longer than national average and where, the FHFA contends, the cost of disposition of problem loans is higher.

The FHFA action would also increase fees on borrowers who make a low down payment or have a poorer credit score.

DeMarco said the fee hikes were designed to attract more private capital into the market.

Watt said he would need to evaluate the "full rationality of the plan." The mortgage industry has protested the hikes, arguing that they were too sudden and steep and would hurt the fragile housing market.

Reacting to the statement, KBW analysts Brian Gardner and Michael Michaud said the announcement raises questions about how FHFA policy would evolve under Watt's leadership.

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