The Federal Housing Finance Agency (FHFA) issued a final rule on March 26 implementing the prohibition against Fannie Mae and Freddie Mac passing the cost of the assessment they are required to pay to fund the National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF) on to the originators of the loans the GSEs purchase or securitize. An interim rule was published for comment on December 16, 2014 (see Memo, 12/15/14). The final rule makes no changes from the interim rule.
The NHTF and the CMF are to be funded by dedicated resources deriving from assessments of 4.2 basis points (0.042%) on the new business of Fannie Mae and Freddie Mac. The Housing and Economic Recovery Act of 2008, which established the NHTF and the CMF, requires the FHFA Director to establish a regulation prohibiting Fannie and Freddie from passing the 4.2 basis point assessment on to loan originators.
New business refers to the unpaid principal balance of Fannie and Freddie’s total new business purchases, which are the single- and multi-family residential mortgage loans or re-financings acquired by the companies and held in their portfolios or that support securities, notes, or other obligations that Fannie and Freddie guarantee.
This provision in law is meant to prevent the cost of the NHTF and CMF from increasing the cost of mortgage lending. It refutes the argument raised by some NHTF and CMF critics that the fee will be passed on to people taking out home mortgages.
The final rule is at http://www.gpo.gov/fdsys/pkg/FR-2015-03-26/pdf/2015-06724.pdf
The interim rule is at http://www.gpo.gov/fdsys/pkg/FR-2014-12-16/pdf/2014-29345.pdf
For more information about NHTF funding, see page 3-10 of NLIHC’s 2015 Advocates’ Guide, http://nlihc.org/sites/default/files/AG_2015_FINAL.pdf