Section 1601 of the Housing and Economic Recovery Act of 2008 (HERA) requires the Federal Housing Finance Agency (FHFA) to conduct an ongoing study of the guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises) and to submit a report to Congress each year. The report is required to contain an analysis of the average guarantee fee and a breakdown by product type, risk class, and size. The report also must analyze the costs of providing the guarantee and provide a comparison to the prior year. The report assists Congress in its oversight responsibilities. FHFA issued the first single-family guarantee fee report in 2009.
This report discusses the guarantee fees charged in 2019 and provides a three-year perspective with data back to 2017. The major findings in this report are:
- For all loan products combined, the average single-family guarantee fee in 2019 increased 1 basis point to 56 basis points.
- The upfront portion of the guarantee fee, which is based on the credit risk attributes (e.g., loan purpose, loan-to-value (LTV) ratio, and credit score), decreased 2 basis points to 13 basis points.
- The ongoing portion of the guarantee fee, which is based on the product type (fixed-rate or adjustable-rate, and loan term), increased 3 basis points to 43 basis points.
- The average guarantee fee in 2019 on 30-year fixed rate loans increased 2 basis points to 58 basis points, while the fee on 15-year fixed rate loans decreased by 1 basis point to 36 basis points. The fee on adjustable-rate mortgage (ARM) loans increased 2 basis points to 56 basis points.
- For each LTV and credit score group, the average guarantee fee increased by 1-3 basis points.
- The average guarantee fee by seller size was 55 basis points for the large (L) seller group, and 56 basis points for the medium (M) and small (S) seller groups.
Questions and comments about this report may be addressed to FHFA at: https://www.fhfa.gov/contact/general