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U.S. Reps. Mark Sanford (R-SC) and Brad Sherman (D-CA) have reintroduced a bill (H.R. 916) that would prohibit Congress from counting increases to Fannie Mae and Freddie Mac’s guarantee fees (g-fees) as sources of funding for unrelated spending.
They say increasing these fees makes loans more expensive and increase costs for borrowers. The Massachusetts Mortgage Bankers Association (MMBA) has urged its members to contact their congressmen and support the bill.
“Guarantee fees are charged and used as a risk management tool by Fannie Mae and Freddie Mac to protect against borrower defaults. This bill would amend the Budget Control Act of 1974 to ensure that guarantee fees cannot be used to offset spending unrelated to protecting the mortgage market,” the congressmen wrote in a statement.
In an email to members, the MMBA wrote, “In 2011, Congress increased g-fees for 10 years in order to pay for a payroll tax cut for two months. This increase has harmed homeowners and continues to do so every day. Using the housing GSEs as a piggy bank to fund unrelated government programs is bad policy – plain and simple. H.R. 916 would prevent this from happening in the future.”
“Past proposals have attempted to use g-fees to pay for unrelated government spending on the backs of homeowners,” Sherman said in a statement. “G-fees are a critical risk management tool, and they should continue to be used only for that purpose.”
