WASHINGTON—NAFCU has joined with 32 other trade organizations spanning the housing finance ecosystem to urge Congress to "refrain from utilizing Fannie Mae and Freddie Mac guarantee fees ("g-fees") as a source of funding offsets."
The coalition, in its letter, noted g-fees were previously raised 10 basis points over 10 years to fund a two-month period of payroll tax relief in 2011, which harmed homebuyers and will continue to do so until the provision expires in 2021.
"G-fees are a critical risk management tool used by the GSEs to cover operating costs and losses that occur in their operations," wrote the organizations. "Increasing g-fees for other purposes – as was included in the President’s Fiscal Year 2021 budget proposal – effectively taxes potential homebuyers, as well as existing homeowners seeking to refinance their mortgages."
Additionally, the group thanked Sens. David Perdue (R-GA) and Robert Menendez (D-NJ) and Reps. Brad Sherman (D-CA) and Lee Zeldin (R-NY) for introducing bipartisan legislation in the 116th Congress that would prohibit the use of g-fees for this purpose and asked both chambers of Congress to take up the legislation.
‘Unintended Effects’
"The unintended effects of any proposed g-fee increase or extension – no matter how well-intended – will be to raise the cost of homeownership for middle-class Americans, while curtailing refinance activity that helps to keep creditworthy borrowers in their homes," they argued. "Moreover, implementing yet another g-fee increase will hinder policymakers’ abilities to execute the necessary reforms required of the GSEs in the years ahead."