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Mortgage industry pressing for permanent ban on g-fee raids


Mortgage industry trade groups have renewed a push to prevent future raids on the guarantee fees (g-fees) collected by Fannie Mae and Freddie Mac.

Lobbyists sent a letter this past week to the leaders of the U.S. House and Senate budget committees urging the committees to include language in the budget that would prevent the use of g-fees outside the purpose of housing finance. G-fees are collected by the government-sponsored enterprises Fannie and Freddie to offset the risk of loan defaults and also to cover some administrative costs.

Majority Republicans on the House budget committee are expected this week to push through a budget resolution that will serve as their blueprint for the tax and spending bill for fiscal 2017.   

“We would like to get the use of g-fees for anything other than the risk that is being taken on by the enterprises to be off the table as a funding mechanism permanently, or as permanently as anything can be in Washington,” said Joseph Pigg, senior vice president and counsel for the American Bankers Association (ABA). The ABA was among 17 trade groups that signed the letter. Other signatories included some of the biggest industry groups, such as the Mortgage Bankers Association and National Association of Realtors

“There is a pressing need for revenue sources, and we have seen that in any number of things,” Pigg told Scotsman Guide News on Monday. “When you have a pot of money, people are going to be tempted to use it."

Mortgage lobbyists are concerned that Congress will eventually appropriate g-fees to make up for budget shortfalls. 

Mortgage industry groups, though, have argued that the typical taxpayer isn’t as attuned to changes in the g-fee as other more visible taxes, such as the gasoline tax, making the fees a tempting source of revenue.

Last year, leaders from both parties floated the idea of using a portion of the g-fees to make up for a gap in the highway budget, but that proposal was eventually dropped after opposition from the industry.

“Our case has generally prevailed in dissuading Congress from using the g-fees,” Pigg said. “It has come up from the appropriators a number of times, and the industry broadly has been successful in dissuading them from using it. The idea as far as with the budget committee is to take it off the table as permanently as possible.”  

Congress has used g-fees only once before for a nonhousing-related purpose. The fee was hiked by 10 basis points in 2011 for a 10-year period to pay for an extension to the payroll tax credit. 


 

Questions? Contact at (425) 984-6017 or victorw@scotsmanguide.com.

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