GSE guarantee fees: fair or foul?
In an article helpfully titled, Hidden Fees in Most Mortgages Bring Scrutiny to Fannie, Freddie, the Wall Street Journal (subscription required) highlights what it calls, with characteristic understatement:
a new battleground in the regulatory scramble to rein in the two mortgage giants after financial-reporting scandals ousted top officials at both companies
The Journal sees in this a clandestine duopoly:
The fees, which Fannie and Freddie sometimes move in lockstep, may also raise antitrust issues, according to the analysis by the Office of Federal Housing Enterprise Oversight.
… of nefarious intent …
their customers — the nation’s banks and mortgage lenders — increasingly have come to view Fannie and Freddie as ruthless, government-backed competitors, extracting tolls from consumers and lenders at every turn in the mortgage process.
… contrary to Congressional intent that the GSEs use their significant Congressionally-bestowed advantages to further affordability goals …
The big banks, in turn, complain that Fannie and Freddie give some lenders a competitive edge by charging them lower fees and less-restrictive loan terms. They reward these firms for supporting their policy goals in
As Congress prepares to write legislation this year to rein in Fannie and Freddie, lenders are mobilizing to seek limits on the companies’ ability to use their government-granted powers to enter new markets such as mortgage insurance. They also want a prohibition on retaliation through tough nondiscrimination and transparency rules. This could force Fannie and Freddie to standardize their fees and end secret contract terms.
For too long, Rep. Shays says, “they’ve played by their own set of rules.”
