With foreclosures still remaining a major problem in the United States, the Federal Housing Finance Agency recently proposed raising mortgage guarantee-fees in states that have higher foreclosure costs than others.
FHFA would instruct Fannie Mae and Freddie Mac to raise g-fees in order to reflect the disparity in costs in states with the highest foreclosures compared to the national average. The agency will welcome public input but expects to direct the government-sponsored enterprise's with final state-level g-fee pricing in 2013.
Sarah Hu, analyst at the Royal Bank of Scotland, said that New York will be the state that is most impacted by higher g-fees, HousingWire reported. She estimated that the increases could potentially add $100 to annual mortgage payments.
"The planned upfront fee would increase 15-basis points in Illinois, 20 bps in Florida, Connecticut and New Jersey and 30 bps in New York," Hu said according to the news source. "Given that New York prepayment levels are already lower than many other states, an additional 30 bps g-fee hike will further slow refinancing activity in the state."