Posted To: MND NewsWire

The two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac charge guarantee fees or g-fees to lenders when they acquire their single-family loans. These are expected to cover several costs that the GSEs incur in providing their guarantees. In addition to the expected costs when borrowers fail to make their payments, there are administrative costs and a 10-basis point obligation to the U.S. Treasury as required by the Temporary Payroll Tax Cut Continuation Act of 2011. The fourth component, the cost of holding capital to protect against the potential of catastrophic losses from loan defaults is by far the most significant . In 2017 the GSEs began using the Federal Housing Finance Agency’s (FHFA’s) Conservatorship Capital Framework (CCF) which is the amount of capital required…(read more)

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Source: Mortgage News Daily