FHFA Announces Changes to Fannie Mae and Freddie Mac’s G-Fee Pricing
The Federal Housing Finance Agency (FHFA) today announced targeted changes to Fannie Mae and Freddie Mac’s guarantee fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refinance loans.
Fannie Mae and Freddie Mac guarantee the payment of principal and interest on their mortgage-backed securities and charges a fee for providing that guarantee. The guarantee fee, also known as a g-fee, covers projected credit losses from borrower defaults over the life of the loans, administrative costs, and a return on capital.
FHFA has announced that Fannie Mae and Freddie Mac will eliminate upfront fees for:
- First-time home buyers at or below 100% of area median income (AMI) in most of the United States and below 120% of AMI in high-cost areas;
- HomeReady and Home Possible loans (Fannie Mae and Freddie Mac’s flagship affordable mortgage programs);
- HFA (Housing Finance Agency) Advantage and HFA Preferred loans; and
- Single-family loans supporting the Duty to Serve program.
In addition, the upfront fees for cash-out refinance loans will be revised to reflect a range of pricing changes from a decrease of 1 percentage point to an increase of 1 percentage point.
The fee reductions will go into effect as soon as possible and the implementation of new fees for cash-out refinance loans will begin Feb. 1, 2023.
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