The recent announcement by Freddie Mac that the GSE is considering raising its guarantee fees has given some ammunition to GSE opponents who consider this to be further evidence that the agencies' continuing expansion into lower-credit product carries increasing and unforeseen business risk.

Freddie Mac executive vice president Paul Peterson's recent statements - reflecting that fees would indeed increase if the GSE begins to see a continuing trend in deterioration of credit quality and lower credit scores - have led some market observers to wonder whether FM Watch might be correct in their suspicions that the GSEs are not as good at risk management as they claim to be.

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