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Tuesday, October 7, 2008

Fannie Mae backs off on fee hike

WASHINGTON – Oct. 3, 2008 – Mortgage finance company Fannie Mae, seized by the federal government last month, is canceling a fee hike for new mortgages.

Fannie Mae said Thursday that a fee introduced last year will remain at 0.25 percent of the total loan amount. It had been scheduled to rise to 0.5 percent on Nov. 1. For a $200,000 loan, that’s a savings of $500.

The Washington-based company first introduced the so-called “adverse market delivery charge” of 0.25 percent in late 2007 as the housing market slumped and the company tried to shore up its finances.

The decision comes nearly a month after the company, the largest buyer and backer of U.S. mortgages, was seized by the federal government along with its sibling company, Freddie Mac. The companies’ top executives were ousted as part of the takeover.

In recent months, Fannie and Freddie have hiked several fees for borrowers without sterling credit, while asking for bigger down payments. Real estate agents, mortgage brokers and homebuilders have all complained that the moves were stifling the housing market.

Fannie Mae Chief Executive Herb Allison said in a statement that the company is “evaluating all of our risk-management, underwriting guidelines, pricing and costs.”

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