In a Wednesday letter to the Federal Housing Finance Agency, the National Association of Federal Credit Unions urged the agency to reverse its plan to hike guarantee fees and loan-level price adjustments for loans purchased by Fannie Mae and Freddie Mac.
Earlier this month, the FHFA announced a 10-basis-point increase in g-fees, set to take effect in March. The agency also announced its plans to raise its loan-level price adjustment, which is usually passed to borrowers, for single-family loans with maturities longer than 15 years, taken out by borrowers who do not make large down-payments and do not have high credit scores.
The FHFA has said the fee increases will provide private investors with a greater competitive edge in the secondary market, but NAFCU said, given the current economic conditions, the fee hikes are misguided.
“The cost of borrowing will greatly increase, and lending will inevitably slow down,” NAFCU said in the letter. “While we recognize that the housing market is recovering, it is important that the FHFA considers that there are many indicators showing a slowdown in the recovery.”
The letter points to a 10 percent decrease in applications for purchase from the third quarter of 2012 and a 50 percent decrease in mortgage applications over the same period. The organization also said a majority of NAFCU member institutions will not offer mortgages that do not meet the CFPB’s definition of “qualified mortgage.”
“NAFCU is convinced that these changes will have an adverse impact on our nation’s credit unions and their 97 million members,” the letter said.