Weeks ahead of his swearing-in as director of the Federal Housing Finance Agency (FHFA), Rep. Mel Watt (D-North Carolina) is already making waves with an announcement that he plans to delay an imminent increase in guarantee fees (g-fees).
In a statement released late December, Watt—who is set to take the reins at FHFA January 6—said he intends to delay implementation of the agency’s recently announced g-fee and risk-based pricing plan for Fannie Mae and Freddie
Mac. The plan was first unveiled December 9, one day before the Senate confirmed Watt’s nomination to take his post.
The fee hikes, originally scheduled to take place in March and April 2014, called for a base increase of 10 basis points for all mortgages. The plan also included a larger “adverse market fee” for the states of Florida, New York, New Jersey, and Connecticut, all of which have foreclosure costs that significantly exceed the national average. The increases spelled a likely hike in mortgage rates, causing an outcry from some groups.
In his statement, Watt said he wishes to delay the plan “until such time as I have had the opportunity to evaluate fully the rationale for the plan” and its likely impact on the GSEs’ risk exposure. He also said he wants to first determine the likely effect the increase would have on credit cost and availability.
Adding that he doesn’t plan to delve further into the subject until his swearing-in, Watt noted he felt “that it was important to announce my intentions now because of the prospect that some lenders could start to price the announced changes into the market well before the effective dates.”