Several industry associations, including the American Land Title Association, American Bankers Association, Mortgage Bankers Association and the National Association of Realtors, sent a letter to Sens. Kyrsten Sinema and Rob Portman, requesting they refrain from utilizing Fannie Mae and Freddie Mac guarantee fees as a source of funding offsets for its bipartisan infrastructure framework.
They stated, “As the Senate continues its negotiations on the Bipartisan Infrastructure Framework, our organizations respectfully request that you refrain from utilizing Fannie Mae and Freddie Mac (the GSEs) guarantee fees (G-fees) as a source of funding offsets. As representatives of institutions that span the entire housing finance ecosystem, we firmly believe that G-fees should only be used as originally intended: as a critical risk management tool to protect against potential mortgage credit losses and to support the GSEs’ charter duties.”
The associations noted they were troubled when G-fees were raised by 10 basis points for 10 years to fund a two-month period of payroll tax relief in 2011.
“That increase harmed homebuyers by raising the cost of homeownership in all parts of the country – and continues to do so during the provision’s decade-long lifespan, which expires in September. Since then, whenever Congress or the administration has considered using G-fees to cover the cost of non-housing-related programs, our organizations have united to emphatically let lawmakers know that homeowners cannot, and must not, be used as the nation’s ‘piggybank.’ We are united again to reaffirm our opposition to the Congress’s potential use of these fees for any funding offset that may be contemplated,” the associations stated.
They said G-fees are a critical risk management tool the GSEs use to cover operating costs and losses that occur in their operations. They argued that increasing G-fees for other purposes taxes potential homebuyers and those seeking to refinance their mortgages.
“Given today’s housing affordability and supply constraints, lawmakers must avoid taking any steps that may exacerbate affordability challenges, which could in turn have negative consequences for the broader economy,” the associations stated. “The unintended effects of any proposed G-fee increase or extension will be to raise the cost of homeownership for all Americans, and low- to moderate-income and underserved individuals in particular. In addition, it would curtail refinance activity that helps to keep creditworthy borrowers in their homes. Moreover, implementing yet another g-fee increase will hinder policymakers’ abilities to execute the necessary reforms required of the GSEs in the years ahead.
“We understand the critical need for funding offsets,” the associations continued. “We are united, however, in our belief that using G-fees as a funding mechanism is wholly inappropriate and shifts the burden of paying for infrastructure-related initiatives to the country’s current and future homeowners. The benefits of affordable homeownership accrue to families, communities, and our national economy; we simply cannot allow these benefits to be jeopardized by efforts to raise G-fees unnecessarily.”