Ralph Nader’s letter to Director Mel Watt discussing Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s fees.

Fannie Mae Freddie Mac FHFA Federal National Mortgage Assctn Fnni Me (FNMA)

Ralph Nader’s letter to Mel Watt on Fannie Mae, Freddie Mac fees

Director Mel Watt

Federal Housing Finance Agency

400 7th Street NW

Washington, D.C. 20024

April 15, 2014

Dear Director Watt,

I am writing regarding an April 3, 2014 article in the Washington Post written by the estimable Kenneth Harney, titled “As Fannie Mae and Freddie Mac boost earnings, critics say their fees are excessive and damaging.” Mr. Harney makes some often overlooked, yet necessary, points. As Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) have begun to recover, they have maintained what Mr. Harney calls “punitive, recession era fees” for many mortgages which the government sponsored enterprises (GSEs) buy on the secondary mortgage market.

According to the article, this practice of higher fees has been raising the costs of securing a mortgage to many consumers. The article says that in some cases it can “raise interest rates for borrowers from the mid-4 percent range to more than 5 percent.” Mr. Harney makes the point that this can add thousands to consumers’ costs of financing homeownership.

And according to the article, some critics of the policy are concerned that these policies are slowing down the housing recovery and curbing homeownership. A part of Fannie Mae and Freddie Mac’s mission is to help support homeownership for those borrowers who may not be so well off as to be able to afford the additional fees.

Obviously Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) should maintain policies that set stricter standards for home loans to prevent losses like those they saw during the financial crisis. But a balance needs to be struck between that goal and Fannie Mae and Freddie Mac’s public mission. Mr. Harney’s article suggests that, at present, one of these goals may be sacrificed for the sake of the other; leaving potential lower and moderate-income homebuyers in the lurch.

Are the Federal Housing Finance Agency (FHFA), Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) re-examining policies they put in place during the financial crisis, which may no longer be appropriate as the economy and housing market have begun to recover? How are the FHFA, Fannie Mae, and Freddie Mac balancing the goal of supporting the housing market for all borrowers while also mitigating the risk of a future taxpayer bailout? Are there other avenues for protecting taxpayers from future bailouts without using the increased fees that Mr. Harney mentions in his article?

I look forward to your thoughts on this issue.

Sincerely

Ralph Nader

P. O. Box 19312
Washington, D.C. 20036
202-387-8030