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The average level of guarantee fees charged on GSE-backed loans has increased by two-and-a-half times from 2009, according to the FHFA's report titled Fannie Mae and Freddie Mac Single-Family Guarantee Fees in 2014 released Tuesday. The report is an analysis of the GSEs of fees by product type, risk class, and the volume of a lender’s business. The average fees increased from 22 basis points to 58 basis points from 2009 to 2014. From 2013 to 2014, average fees increased from 51 basis points to 58 basis points.
There are three types of costs that the Enterprises expect to incur by providing their guarantee. First, the cost of borrowers not making their payments. Second, the costs of holding economic capital to protect against potentially much larger, unexpected losses as a result of failure of borrowers to make their payments. Third, general and administrative expenses. There are two types of guarantee fees: ongoing and upfront. Ongoing fees are collected each month over the life of a loan, while upfront fees are one-time payments made by lenders when a loan is acquired by an Enterprise.
The Office of the Comptroller of the Currency listed interest rate, underwriting, strategic, compliance, and cybersecurity as the top supervisory concerns in the Semiannual Risk Perspective for Spring 2015 released Tuesday. Based on data that covers risks to banks and federal savings associations through the end of 2014, the report, noted an overall decline in revenues in profitability for all OCC-supervised institutions. The four main areas of data presented in the report are operating environment, bank condition, key risk issues, and regulatory actions.
