The liquidity crunch in the capital markets could put upward pressure on the cost of selling mortgages to Freddie Mac and Fannie Mae.

Though mortgages have performed well as trading in other asset classes has dried up, the gap between yields on mortgage-backed securities and Treasuries has widened, meaning higher costs to Fannie and Freddie.

If the situation persists, Freddie Mac may have to "think about" changing its fee structure, Freddie Mac president David W. Glenn told reporters at the Mortgage Bankers Association.

Mr. Glenn and the chairman of rival Fannie Mae, James A. Johnson, emphasized that current conditions do not warrant a hike in the guarantee fee, which they charge lenders to assume the credit risk of loans. And Mr. Glenn declined to say how long spreads would have to remain wide before Freddie Mac would consider higher fees.

"This is relatively new. I don't want to put a timetable on it," he said.

Still, it is the first time since the early years of the secondary market that the possibility has been raised of an across-the-board hike in the fee.

Lenders generally pay a basic guarantee fee of about 25 basis points to Fannie or Freddie to assume the risk of each loan. The fee can be as high as 100 basis points on especially risky loans, and sometimes lower when one of the companies is promoting a particular kind of loan product.

Freddie Mac officials said consumers are already bearing the cost of the risk-averse investor community. They noted that rates on mortgages have fallen, but not as much as on Treasuries.

But Donald E. Lange, president of the MBA, said a higher guarantee fee would be passed along to consumers.-Stephen Kleege

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