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Federal Home Loan Mortgage Corp (OTCBB:FMCC) will minimize fees for some borrowers that have low credit scores and little funds for down payments. Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) will also reduce the fees. However, the fee changes are so small that hardly borrowers will take a note of it.

The details

The Federal Housing Finance Agency, the mortgage companies’ regulator, announced changes in the fees that Freddie and Fannie charge to back loans. These charges are channeled through to borrowers in mortgage rates. The fee changes will not have any impact on Federal Home’s revenue. Some lower risk borrowers will see costs rise while some higher-risk borrowers who have worse credit or make lower down payments will see costs go down.

The implications

The irrelevance of the fees drop for less-creditworthy borrowers, who in past have seen fees rise, is probably going to disappoint some of the housing advocates. They expected to see fees drop more. After the latest change, the borrower’s mortgage rate probably wouldn’t decline more than 0.05% or increase by over 0.07 or 0.1%. The fee changes are effective on September 1, 2015. There is also one more conservatives group that is not happy with the move. They wanted the FHFA to increase the fees in order to attract private funds to enter the market.

The initiatives

Federal Home will remove a fee surcharge placed on loans during the financial crisis. However, it will compensate the reduction of the charge by increasing fees on certain borrowers, like the borrowers acquiring a loan for an investment property. The objective is to assure industry, homeowners and taxpayers that the companies are striving for an appropriate balance between soundness and safety.

In last trading session, the stock price of Federal Home surged 0.75% to close the trading session at $2.71. The moderate gains came at a share volume of 1.20 million.

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