Comment Detail

Comment

On behalf of the state Housing Finance Agencies (HFAs) it represents, the National Council of State Housing Agencies (NCSHA) appreciates the opportunity to respond to the Federal Housing Finance Agency’s (FHFA) June 5 request seeking input on the guarantee fees (g-fees) that Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac charge lenders in exchange for guaranteeing single-family mortgage loans.

NCSHA applauds Director Watt’s decision to suspend indefinitely the g-fee adjustments that FHFA initially announced in December and to seek public input before taking any further action. In our view, the planned adjustments seemed arbitrary and could have had unintended negative consequences for the housing market, including making buying a home less affordable for many low- and moderate-income borrowers.

We strongly agree that before any changes are made to the GSEs’ g-fees, further review is needed to understand the impact any such adjustments will have on the availability of mortgage credit as well as the GSEs’ financial health. Because of the dominant role Fannie Mae and Freddie Mac currently play in housing finance, any adjustments made to the g-fees are likely to have substantial ripple effects across the entire housing market.

We also thank Director Watt and FHFA for renewing its focus on one of the key elements of its core mission: ensuring that the GSEs “serve as a reliable source of liquidity and funding for housing finance and community investment.” This emphasis, which has key implications for the discussion about potential g-fee increases, is evident in FHFA’s 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac (FHFA’s 2014 Strategic Plan), as well as the 2014 Scorecard for both firms, which both recognize that “[A] healthy housing finance market requires liquidity and access across different market segments to provide homeownership opportunities to creditworthy borrowers.”

NCSHA appreciates that, as conservator of Fannie Mae and Freddie Mac, it is FHFA’s duty to ensure that the g-fees Fannie Mae and Freddie Mac charge are adequate to ensure the firms’ fiscal stability and protect taxpayers against potential losses. That being said, FHFA should remain mindful of other important factors when determining how to set g-fees. Specifically, FHFA should be careful not to set g-fees so high that they substantially increase homeownership costs for low- and moderate-income borrowers or jeopardize the housing market’s still-fragile recovery.

We urge FHFA to use this public comment and review period as an opportunity to build on its recent efforts to promote an efficient and accessible housing market. To this end, we ask that, when considering how to structure g-fees, FHFA not just consider how to deliver substantial revenue for both Fannie Mae and Freddie Mac, but to give equal consideration to how to ensure a liquid housing finance market capable of serving all creditworthy borrowers. One specific strategy for responsibly accomplishing this balance is to continue to allow and to encourage both Fannie Mae and Freddie Mac to offer advantaged pricing on loans originated through state HFA programs.

Please see the attached file for NCSHA's complete comment letter.