Fannie Mae and Freddie Mac are still imposing punitive, crisis-era fees that can inflate borrowing costs on a home by thousands of dollars, even as the firms enjoy record profits, lower delinquencies, and rising home values.
The companies severely tightened their credit standards while under government conservatorship, creating a series of fees known as "loan level pricing adjustments" meant to charge borrowers more if they have certain perceived risks. As a result, buyers with small down payments or low credit scores pay higher add-on fees. For some borrowers, these additional costs can bloat their interest rate from the mid-4 percent range to more than 5 percent.
Critics say the fees are preventing prospective moderate-income, first-time, and minority buyers from purchasing homes. Moreover, they say the fees are unnecessary because Fannie Mae and Freddie Mac are already protected from most losses with insurance policies paid for by consumers.