Housing Policy Council: G-fee is a tax on homebuyers, refinancers
Joins chorus of voices opposed to raiding g-fees like a piggy bank
MoreRelated Articles
Related Events
A growing number of voices in the housing industry want Congress to drop the plan the plan to redirect Fannie Mae and Freddie Mac g-fees to pay for highway repairs.
That’s the fee Fannie Mae and Freddie Mac charge to guarantee home loans offered to investors on the secondary market.
Sens. Mike Crapo, R-Idaho, and Mark Warner, D-Va., object to the use of g-fees to offset the cost of a massive transportation bill.
The bill in question, called “The Developing a Reliable and Innovative Vision for the Economy Act” or the DRIVE Act, is a six-year highway authorization that will allow planning for important long-term projects around the country, and provides three years of guaranteed funding for the highway trust fund.
One of the ways the $47 billion bill is paid for is a significant delay to scheduled cuts in g-fees. The bill would delay a scheduled 10 basis point cut in g-fees from 2021 to 2025.
The Housing Policy Council has joined the chorus of industry voices against the move, saying they applaud an amendment by Senators Crapo and Warner to remove a provision from the Highway Bill, currently being considered in Congress, that would effectively be a tax on homebuyers and refinancers.
G-fees are paid for by consumers in the form of higher interest rates, hitting both new homebuyers and those refinancing current loans.
HPC, along with other housing trade associations, sent a letter today to Senators Crapo and Warner supporting the amendment.
“G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing g-fees for other purposes – even just extending the current fee increase for four years – effectively taxes potential homebuyers and consumers looking to refinance their mortgages,” the letter said. “…implementing yet another g-fee increase unrelated to housing needs will act to hinder the necessary reforms required of the GSEs in the years ahead.”
The full letter can be read here.
July 28, 2015
The Honorable Mike Crapo
U.S. Senate
239 Dirksen Senate Office Building
Washington, D.C. 20510
Dear Senators Crapo and Warner:
The undersigned organizations write in support of your amendment, #2399, offered to H.R. 22, the
legislative vehicle for a multi-year extension of the highway bill. Your amendment would remove a
four-year extension of the 10-year, 10 basis point increase in Fannie Mae’s and Freddie Mac’s credit
risk guarantee fees (g-fees) that originally passed Congress in 2011.
Our members were deeply troubled when the original increase passed in 2011. That increase has
harmed homebuyers and consumers – and will continue to do so for the duration of the provision’s
10-year lifespan. Since then, whenever Congress has considered using g-fees to cover the cost of
programs unrelated to housing, our members have united to emphatically let Congress know that
homeownership cannot, and must not, be used as the nation’s piggybank. And now we are united
again, to make that same statement regarding the use of these fees to pay for the highway bill.
G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against
losses from faulty loans. Increasing g-fees for other purposes – even just extending the current fee
increase for four years – effectively taxes potential homebuyers and consumers looking to refinance
their mortgages.
The nation’s housing sector remains in a precarious state. Though we are continuing to see signs of
improvement, we must avoid taking any steps that may retard that recovery and ultimately send our
overall economy into another tailspin. The unintended impact of this proposed g-fee increase would
be to keep housing consumers on the sideline, preventing the absorption of our nation’s large real-
estate owned inventory, as well as curtailing refinance activity that is needed to keep responsible
borrowers in their homes. Furthermore, implementing yet another g-fee increase unrelated to
housing needs will act to hinder the necessary reforms required of the GSEs in the years ahead.
We understand the need to reauthorize highway programs. However, we are united in our belief that
using g-fees as a funding mechanism for this purpose shifts the burden to homeowners and the
housing sector in a manner that prevents Fannie Mae and Freddie Mac from effectively managing
their risk.
Thank you for your efforts to remove this troublesome provision from H.R. 22.
The Honorable Mark Warner
U.S. Senate
475 Russell Senate Office Building
Washington, D.C. 20510
American Bankers Association
American Land Title Association
Community Home Lenders Association
Community Mortgage Lenders of America
Consumer Mortgage Coalition
Credit Union National Association
Housing Policy Council of the Financial Services Roundtable
Leading Builders of America
Mortgage Bankers Association
National Association of Federal Credit Unions
National Association of Home Builders
National Association of REALTORS®
U.S. Mortgage Insurers
Cc: The Honorable Mitch McConnell, Majority Leader
The Honorable Harry Reid, Minority Leader
The Honorable Richard Shelby, Chairman, Senate Committee on Banking, Housing, &
Urban Affairs
The Honorable Sherrod Brown, Ranking Member, Senate Committee on Banking, Housing,
& Urban Affairs