§4547 Enterprise Guarantee Fees

Summary

The Director must make the housing enterprises raise the fees they charge for guaranteeing mortgage-backed securities tied to 1- to 4-family homes for deals done after December 23, 2011. The Director will set fee levels to match the risk of loss and the cost of capital, but the average fee must be at least 10 basis points higher each origination or book year than the average fee in 2011. Enterprises may not cut other charges to cancel out the new fee. The Director can let the fee rise slowly over the two years starting December 23, 2011, require the same pricing across lenders, allow price differences for higher or lower risk, and consider market conditions. The Director can block any guarantee that does not meet these rules or that loosens underwriting mainly to meet them. Money from the higher fees goes straight to the U.S. Treasury and is available only if Congress appropriates it. Enterprises must report each year to the Director and Congress about fee changes, borrower risk, and needed fixes. The Director can force fee changes and, if an enterprise breaks the rule for two years in a row, stop it from giving guarantees for at least one year. The rules end on October 1, 2032. Definitions: Guarantee fee — the fee required under these rules, including Fannie Mae’s guaranty fee and Freddie Mac’s management and guarantee fee. Average fees — the 2011 average single-family fee rate plus any up-front cash spread over its average life, measured in basis points.