By Jody Shenn
Nov. 15 (Bloomberg) -- Freddie Mac, the second-largest source of money for U.S. home loans, joined Fannie Mae in introducing or raising fees on mortgages the company buys from lenders because of the increased risks in slumping housing and mortgage markets.
Freddie Mac is primarily setting new fees for mortgages made to borrowers with credit scores below 680, whose loans exceed 70 percent of their property's value. The new charges range from 0.75 percent to 2 percent depending on credit scores, according to a bulletin by the company. The changes take effect March 1.
The higher fees by Freddie Mac and Fannie Mae follow an 81 percent drop over the past year in the market for new mortgage securities without guarantees from the government-sponsored enterprises. The tightening of lending standards that's resulted has worsened defaults by borrowers unable to refinance rising adjustable-rate loans and has limited home sales and prices.
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