The newly reenergized debate on whether Fannie Mae and Freddie Mac are overstepping their charters has not been short of buzzwords, with “mission creep” and “retaliation” among the most favored.

So why not throw “cost of funding” into the mix? As an integral part of the way the two government-sponsored enterprises act as a secondary mortgage market, it is hardly a new concern. But it is the common denominator for lenders of all sizes that chafe at the GSEs’ influence in the market.

Bankers and trade groups say their business is squeezed by the lower cost the agencies pay for capital. Because of income tax breaks, exemption from Securities and Exchange Commission filing fees, and the perception that the government would step in with support if either faced financial collapse, the GSEs pay less for money than many banks and thrifts.

And that means the two GSEs can buy loans more cheaply than banks say they can make them, and still keep a healthy margin.

Pete Wissinger, chief executive officer of Wells Fargo Home Mortgage, though praising the GSEs in their “traditional” role of providing liquidity for mortgages, said their funding advantages represent a real threat to many mortgage companies.

“With their leverage ratios and cost of capital, you’re not on a level playing field with them,” Mr. Wissinger said. “They have a charter to help foster homeownership in America, but when they expand into other products and other issues, you have to ask, ‘Why should they continue to leverage those government benefits, because they’re really outside that mission.’ “

“We can’t fund a loan profitably at the rate Fannie Mae or Freddie Mac can,” said Louis Nevins, president of the Western League of Savings Institutions. The league’ members include thrifts ranging from $195 million-asset Washington Mutual Inc. of Seattle to $57 million-asset Sincere Federal Savings Bank of San Francisco.

Fannie Mae and Freddie Mac “are competing with us with advantages that are impossible for us to match,” Mr. Nevins said.

Despite frequently aired grievances by many mortgage bankers, some of the biggest institutions in the business say that they have no reason to complain about the arrangement with the agencies.

“We have somewhat of a unique position in the market, in that we do the mortgage banking and portfolio lending all within one shop,” said Benson Porter, a senior vice president in government relations for Washington Mutual.

“From a mortgage banking side, Fannie is a very important partner to us … we have always had a cordial and professional relationship with them,” he said.

But there are plenty who distrust the GSEs. In part, they worry that the agencies could eventually deploy their cost advantages on the origination side of the business, something both Fannie and Freddie deny is in their plans. Whether or not it plays out that way, many banks say their margins are pinched by the GSEs’ market power.

Until recently, Fannie and Freddie’s influence was felt mainly in the plain-vanilla fixed-rate conforming mortgage market. But critics of the agencies’ government backing say that as the agencies begin to buy loans in new market segments the issue gains in significance. Subprime lending is one area in which lenders say they have begun to see an uptick in enterprises’ financing. That could spell trouble for many in the subprime business as margins shrink.

Lenders are saying the agencies have also become more active in the multifamily market. And some institutions with big adjustable-rate loan portfolios fear that the GSEs may start buying more of these mortgages and thus begin to lean on the prices in that market.

“Anyplace they turn their attention, they underprice us,” Mr. Nevins said.

That is exactly the point, according to the agencies.

“We are not in the market to make banks more profitable,” said Freddie Mac spokesperson Sharon McHale. While “there is clearly a funding advantage,” studies have shown that the benefits passed on to consumers are four times this advantage, she said.

Fannie Mae said its involvement in the subprime market is just as much within the bounds of its charter as prime rate mortgages.

Because of advances in the GSEs’ automatic underwriting system “we are able to purchase riskier loans” than before, said Janice Dau, a spokeswoman for Fannie.

“That fits well within the agency’s mission of helping as many borrowers get mortgages as possible,” she said.

Aside from the influence over rates the GSEs exert through their position as loan acquirers, the biggest problem banks have had recently is the agencies’ making changes to their processes that risk disintermediating the banks.

FM Watch, an anti-GSE lobbying group funded by several of the largest banks in the mortgage business, has been trying to limit the activities of Fannie and Freddie and released a report last week on so-called mission creep by the two agencies. Offered as proof: Freddie Mac is planning to make its automated underwriting products available to real estate agents, which in turn could use them directly with consumers.

Ms. McHale says that Freddie “has no desire to go directly to the borrowers.”

Instead, she said, Freddie’s technological innovations bring more types of lenders — some of them smaller and nontraditional — into the business.

“In many cases it’s the larger lenders that are complaining,” she said.

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