The Clinton administration said Thursday that Ginnie Mae would slash its guarantee fees on home loans to some urban borrowers.
Henry Cisneros, Secretary of the Department of Housing and Urban Development, said the rebate was expected to generate an additional $1 billion in home loans to borrowers in such cities as Chicago, New York, and Los Angeles. The fees are expected to be cut up to 50%, depending on lender volume. Currently, Ginnie Mae fees are $60 a year per $100,000 loan.
Ginnie Mae, formally the Government National Mortgage Association, guarantees principal and interest payments on home loans made through the FHA, VA, and rural housing programs. In 1994, Ginnie Mae guaranteed $7.5 billion in loans made to central-city borrowers.
The timing and venue of Mr. Cisneros' announcement - Oakland, Calif. - suggested the Clinton administration was looking for good news of its own to compete with the Republican National Convention in San Diego.
Robert O'Toole, senior staff vice president of the Mortgage Bankers Association, said lenders could pass on the rebate to loan agents and mortgage brokers in the form of higher commissions for central city loans.