In an investor presentation delivered Wednesday, Freddie Mac executives predicted that so-called single family flow all-in guarantee fees at the mortgage finance giant could reach as high as 35 basis points come the fourth quarter of this year. Guarantee fees are the percentage of the loan amount that Fannie Mae and Freddie Mac charge to provide their guarantee on principal and interest payments to agency MBS investors. Freddie Mac’s “g-fee” currently stands around 20 basis points, it said. Fannie Mae hiked its g-fees to nearly 30 basis points last November as part of a plan to compensate for increased portfolio risk. The increased fees are one way both Fannie and Freddie are offsetting the higher credit costs that come not only with the downturn in the U.S. housing market, but also with the increased protfolio risk arising from to higher legislated lending limits, and other likely policy changes that seem likely to further increase mortgage bankers’ reliance on the mortgage giants for funding mortgages. The increased fees, however, also have the effect of raising rates that borrowers pay to obtain a conforming loan, something critics have said is counterproductive to efforts by legislators and policymakers to increase access to affordable mortgage loans. The full investor presentation is available here.

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