The Housing and Economic Recovery Act of 2008 (HERA) requires the Federal Housing Finance Agency (FHFA) to submit reports to Congress annually on the guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises). HERA requires an analysis of fees by product type, risk class, and the volume of a lender’s business. The report must also analyze the costs of providing the guarantee and provide a comparison to the prior year. FHFA issued the first such report in 2009. This report covers guarantee fees charged in 2014.

Among the major findings of this report are:

• Overall, the average level of guarantee fees charged has increased since 2009. The guarantee fees are currently two-and-a-half times their previous level; from 2009 to 2014, average fees increased from 22 basis points to 58 basis points. From 2013 to 2014, average fees increased from 51 basis points to 58 basis points.
• In 2014, primarily because of changes in the models the Enterprises use to estimate the capital necessary to support their mortgage guarantee business, gaps on 30-year fixed rate loans were more negative and gaps on 15-year loans were more positive than in 2013. While the gap on 30-year fixed rate loans was negative relative to targeted return on capital, the returns on capital were positive.
• The percentage of loans that the Enterprises purchased from small lenders grew substantially in 2014, while pricing differences between small sellers and large sellers remained small.

In April 2015, FHFA completed a comprehensive review of the agency's policy for guarantee fees charged by the Enterprises to lenders. FHFA decided not to change the general level of fees. However, FHFA made certain minor and targeted fee adjustments. Overall, the set of modest changes to guarantee fees is roughly revenue neutral and will result in little or no change for most borrowers.

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