Federal regulators propose higher mortgage costs

Federal Housing Finance Agency acting director Edward DeMarco said Monday at a conference in Raleigh that reshaping the mortgage giants three years after the federal government took them over involves spreading risks.

Reducing the risk to taxpayers, who have already invested $140 billion in Fannie Mae and Freddie Mac, may mean private interests take on more. DeMarco said that could include requiring more private mortgage insurance from borrowers and higher fees from lenders to guarantee loans.

"I think there are always challenges. There's always conversations. We're working them out very well," said Michael Williams, president and chief executive of Fannie Mae. "We have a good relationship with the regulators, and we're all trying to do the right thing, which is most important."

DeMarco said the changes would be phased on gradually to avoid shocking the sluggish housing market.

Local lenders said the added hurdles likely wouldn't scare off potential home buyers if interest rates remain close to record low levels.

"There's not enough news that came out negative (Monday) that should bother anybody about buying a house or refinancing," said Kelly Fox of Towne Mortgage, noting that lenders already require much more documentation for a mortgage than in years past.

According to Triangle Multiple Listing Service, home sales in the area were up 23 percent in August over last year, and pending sales were up 22 percent. Both indicators have been rising in recent months.

DeMarco said the most pressing tasks include creating a framework allowing more borrowers who are underwater on their mortgages to refinance now at rates that are at levels not seen in decades.