WASHINGTON (7/23/15)--CUNA strongly opposes a U.S. Senate decision to use Fannie Mae and Freddie Mac guarantee fees to fund the extension of highway transportation programs.
Senate Majority Leader Mitch McConnell (R-Ky.) announced the bill Tuesday, which included extending the current guarantee fees (g-fees) through 2025.
“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,” reads a letter signed by CUNA and a number of other trade organizations.
G-fees are charged by Fannie and Freddie to protect against losses from faulty loans. In 2011, those fees were raised by 10 basis points until 2021, in order to fund a two-month extension of payroll tax relief. The Senate proposal would add another four years onto that, for a total offset of $1.9 billion.
“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 reads.
CUNA believes the unintended impact of this proposed increase would prevent the reabsorption of real-estate owned inventory and curtail refinance activity needed to keep responsible borrowers in their homes.
Sens. Mike Crapo (R-Idaho) and Mark Warner (D-Va.) wrote to McConnell and Senate Minority Leader Harry Reid (D-Nev.) Wednesday to ask the legislators to uphold a budget resolution that would prohibit the use of g-fees as an offset.
“Each time guarantee fees are extended, increased and diverted for unrelated spending, homeowners are charged more for their mortgages and taxpayers are exposed to additional risk,” Crapo and Warner wrote. “Attempts to increase or extend these fees makes it more difficult to reform our housing finance system and wind down Fannie Mae and Freddie Mac.”