G-fees should not be funding offset in infrastructure framework

July 26, 2021

Fannie Mae and Freddie Max guarantee fees (g-fees) should not be used as a source of funding offsets in the bipartisan infrastructure framework being negotiated in the Senate, CUNA and other organizations wrote to Sens. Kyrsten Sinema (D-Ariz.) and Rob Portman (R-Ohio) Thursday.

Fannie and Freddie Mac charge lenders g-fees, primarily to protect against credit-related losses in the mortgages they back. Those fees were raised by 10 basis points in 2011 to fund a two-month extension of a payroll tax cut.

“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 letter reads. “[The 10 basis point] 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.”

The organizations add that lawmakers must avoid taking any steps that may increase affordability challenges, which could in turn have broader negative economic consequences.

CUNA has supported previous legislation that would prohibit the use of g-fees to offset unrelated federal spending.