WASHINGTON—CUNA, NAFCU and numerous other groups urged congressional leaders Tuesday to not use “g-fees” as a source of funding for any extension of highway programs.
In a letter to House and Senate leaders, the organizations requested that Congress refrain from utilizing Fannie Mae and Freddie Mac's credit risk guarantee fees, or g-fees, as a source of funding not only for highway programs, but for “any other purpose beyond supporting the companies’ safety and soundness.”
“G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from loans that default. Increasing g-fees for other purposes – even just extending the current incremental fee increase added to offset the cost of the payroll tax holiday for four years – imposes an unjustified burden on the housing finance system,” the letter stated. “It is important to note that g-fees are included within the cost structure for all Fannie Mae and Freddie Mac backed mortgages and are paid by borrowers over the entire life of their loans. Thus any increase imposed now would continue to be paid by borrowers with GSE mortgages for many years beyond the proposed 3-year imposition of the additional fee.”
The group added that the nation’s housing market remains in a “precarious state. The unintended impact of this proposed g-fee increase extension will 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 creditworthy borrowers in their homes. Such a fee would be a regressive tax, imposing the largest burden on low- and moderate-income borrowers and borrowers with low wealth who already face serious obstacles in obtaining fair and sustainable credit. Moreover, many of these borrowers struggling to obtain homeownership are disproportionately Latino and African-American. Adding an additional fee to mortgages for unrelated expenses would only increase the hurdles these families already face in achieving the American dream of homeownership.”
In addition to CUNA and NAFCU, some of the groups signing the letter include: the American Bankers Association, Center for Responsible Lending, Community Mortgage Lenders of America, Consumer Federation of America, Consumer Mortgage Coalition, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Home Builders, National Association of REALTORS, and the National Association of Real Estate Brokers.