Fannie Mae backs off on fee hike

WASHINGTON (AP) - Mortgage finance company Fannie Mae, seized by the federal government last month, is canceling a fee hike for new mortgages.

Fannie Mae says 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 November 1st. For a $200,000 loan, that's a savings of $500.

The Washington-based company first introduced the so-called "adverse market delivery charge" 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.

(Copyright 2008 by The Associated Press. All Rights Reserved.)