No method to Fannie, Freddie guarantee fee madness?

Report: Goal of increasing private sector's participation in mortgage markets remains undefined

Fannie Mae and Freddie Mac's federal regulator is gradually increasing the guarantee fees charged by the mortgage giants without having defined exactly what its goal of "increased private sector investment in mortgage credit risk” means, or setting benchmarks to evaluate its performance toward that goal. That's according to a report released today by the Federal Housing Finance Agency's Office of Inspector General. Fannie and Freddie generated $12.5 billion in revenue in 2012 from guarantee fees they charge to protect investors in their mortgage-backed securities (MBS) against losses, the OIG report said. Guarantee fees are a hot-button issue, amid fears that lawmakers will use their ability to increase Fannie and Freddie's guarantee fees in order to raise money to fund legislation with little or no connection to housing. The fees have nearly doubled since 2011, with one increase tied to legislation designed to offset temporary reductions in federal payroll taxes, and th...