Scotsman Guide > News > September 2015 > News Story

 Enter your e-mail address and password below.

  •  
  •  

Forgot your password? New User? Register Now.

News Archives

 
Subscribe icon Subscribe to our weekly e-newsletter, Top News.

Senators introduce bill to prevent GSE g-fee raids


A bipartisan group of U.S. senators introduced a bill this week that would prevent Congress from redirecting the guarantee fees, or g-fees, collected by Fannie Mae and Freddie Mac to other government-spending programs.

The legislation, dubbed the “Jumpstart GSE Reform Act,” would effectively restrict the use of g-fees to the intended purpose, which is to provide a government guarantees for loans used to back mortgage-backed securities issued by the government-sponsored enterprises (GSEs). 

G-fees are charged to lenders and passed on to borrowers. Prior to the August break, Senate leaders proposed extending until 2025 a previously approved temporary g-fee increase of 10-basis points that had been set to expire in 2021. The original increase was approved by Congress in 2011 and used to pay for a temporary cut in payroll taxes. The revenue raised from the proposed four-year extension was slated to be redirected to the federal highway budget. 

Banking and housing trade groups fear that g-fees could become an easy target anytime the government needs a source of funding. G-fees aren’t widely understood by homebuyers, banking groups argue, and could be slipped into a bill as a hidden tax. 

The bill, authored by U.S. Senators Bob Corker, R-Tenn., Mark Warner, D-Va., David Vitter, R-La., and Elizabeth Warren, D-Mass., was introduced in the Senate Banking, Housing and Urban Affairs Committee. The bill would also prohibit the sale by the U.S. Treasury of GSE preferred shares without congressional approval and structural housing-finance reform. 

The authors of the legislation said in a news release that these changes were needed to remove impediments to comprehensive housing-finance reform. The current bill is an iteration of a prior bill that was introduced in 2013 but failed to advance.

“While comprehensive reform is my preference, we must not allow a small minority to prevent us from making any progress at all," Corker said. 

Earlier this week, 32 trade groups sent a letter to congressional leaders in the Senate and House asking Congress not to use g-fees for any purpose other than to guarantee the loans or related expenses.

Joseph Pigg, a senior vice president and counsel with the American Bankers Association, told Scotsman Guide News earlier this week that the industry expects to face future fights over proposals to tap g-fees until there is comprehensive reform. He said the diversion of the fees remains a particularly tempting option now because mortgage rates are low and loans are relatively inexpensive.

“Congress is all over the map on this one,” Pigg said. 


 

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

Get the latest news and articles from Scotsman Guide straight to your inbox.


Send me the following e-mails:





Learn more about Scotsman Guide e-mails

Thank you for signing up to receive e-mails from Scotsman Guide.

A confirmation e-mail has been sent to the address you provided.

For questions regarding your e-mail subscriptions please contact Circulation@ScotsmanGuide.com or call (800) 297-6061.


Fins A Lender Post a Loan
Residential Find a Lender Commercial Find a Lender
Follow Us:Visit Scotsman Guide Facebook pageVisit Scotsman Guide LinkedIn pageVisit Scotsman Guide Twitter page
 
 
 
 

 
 

© 2019 Scotsman Guide Media. All Rights Reserved.  Terms of Use  |  Privacy Policy