WASHINGTON (7/29/15)--CUNA has offered support for an amendment contained in the highway extension bill (H.R. 22) that would remove the four-year extension of Fannie Mae and Freddie Mac guarantee fees. CUNA and its fellow trade organizations previously wrote to Senate leadership expressing opposition to the extension.
Guarantee fees, otherwise known as g-fees, are charges by Fannie and Freddie to protect against losses. In 2011, those fees were raised by 10 basis points for the next 10 years to fund a two-month extension of the payroll tax.
They are currently slated to expire in 2021, but the highway bill would extend the raised fees until 2025 to offset highway costs. The extension is estimated to offset a total of $1.9 billion.
“G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans,” the letter reads. “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 adds that the g-fee extension could hinder the necessary reforms of Fannie and Freddie down the road, curtail refinance activity and prevent the absorption of the nation’s large real-estate owned inventory.
Sens. Mike Crapo (R-Idaho) and Mark Warner (D-Va.) proposed the amendment to H.R. 22 to remove the extension.