Why do I feel like when someone calls me to talk about interest rates, they are calling multiple people, scouring the internet, and getting a lot of misinformation? I have a good friend who works at Freddie Mac (FHLMC) who I met for dinner recently. Over dinner conversation she mentioned that when FHLMC sends out their report on average interest rates. They get calls daily from homebuyers and people interested in refinancing. These people ask how to apply with FHLMC for that rate! My friend says the callers will say, “Can I get that rate from you that you guys reported, I can’t find it anywhere else!” They then have to explain that FHLMC is not a lender. FHLMC is a corporation authorized by Congress to provide a secondary market for residential mortgages.
Blog Category: FHLMC
FHFA is the Federal Housing Finance Agency. They regulate Fannie Mae and Freddie Mac. FHFA just announced another round of Fannie Mae and Freddie Mac guaranty fee increases. These are the fees that Fannie and Freddie charge lenders to guarantee loans, and of course Fannie and Freddie have the backing of the U.S. government. Without this federal backing, Fannie and Freddie would not exist, or they certainly would not exist in the size and scope they have over decades and decades.
The Treasury Department last week altered its financial support of Fannie Mae and Freddie Mac. The revised terms are that the guarantees of how much the Feds will back them are going down, but officials say the amounts they are still guaranteeing will be plenty. More importantly, there will now be no dividend that Fannie Mae and Freddie Mac has to pay. The new terms are that whenever there are profits they will simply be swept over to the Feds; and losses will still be covered by we the people.
Prior to this change, since there have been no profits for the most part in the last four years since this takeover of Fannie and Freddie began, Fannie and Freddie have had to borrow money from the Treasury (i.e. we taxpayers) to make their dividend payment. Now the requirement
I just heard that FHFA (Federal Housing Finance Agency) has implemented a hike to the Fannie Mae/Freddie Mac guarantee fee. This is the fee that the GSE’s (Government Sponsored Enterprises) which are now actually GOE’s (Government Owned Enterprises) pays to the government for their backing. They raised this fee to pay for the Temporary Payroll Tax Cut, signed by President Obama! The announcement said specifically: