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. HERA requires the report to contain an analysis of the average guarantee fee and a breakdown by product type, risk class, and size. The report also must present an analysis of 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.
In this report FHFA discusses the guarantee fees charged in 2020 and provides a three-year perspective with data back to 2018. The major findings in this report are:
- For all loan products combined, the average single-family guarantee fee decreased 2 basis points to 54 basis points in 2020.
- 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 11 basis points on average in 2020.
- The ongoing portion of the guarantee fee, which is based on the product type (fixed-rate or adjustable-rate, and loan term), remained unchanged at 43 basis points on average in 2020.