The banking and housing industries are warning Congress to steer clear of using fees assessed by Fannie Mae and Freddie Mac as a “piggy bank” during budget talks.
In a letter sent to budget conferees, a coalition of some of the nation’s largest industry groups warned that boosting “guarantee fees” demanded by those housing giants could push away potential homeowners and upend efforts to overhaul the housing market.
“We must avoid taking any steps that could keep housing consumers on the sidelines and hinder that recovery,” the groups wrote. “We respectfully request that you not use g-fees as a revenue source in any budget agreement.”
During prior fiscal debates, lawmakers have turned to the so-called “g-fees” as a handy source of revenue to cover other policy priorities. In 2011, Congress agreed to hike that fee, which Fannie and Freddie demand from lenders in exchange for guaranteeing mortgages, to cover the cost of a two-month extension of the payroll tax holiday. Other lawmakers have suggested using the fee to pay for coastal restoration or immigration reform, for example.
But the groups contend that the g-fee was never meant to cover such costs, and say arbitrarily increasing it to cover unrelated expenses makes buying a house more expensive and exacerbates the problems in the market.
They were “deeply troubled” when Congress agreed to hike the fees and are looking to head off that temptation yet again.
Some lawmakers are aware of the need to wean Congress off of the fees. The Senate unanimously agreed to a measure that would create a budget point of order if a proposal sought a g-fee increase to cover unrelated spending.
The groups signing on to the letter include many of the most prominent in the housing and finance sectors, including the American Bankers Association, the Mortgage Bankers Association, and the National Association of Realtors.
Budget conferees are trying to come up with some sort of budget agreement, but there has been little sign of progress. The group, crafted as part of the deal to end the government shutdown, has until Dec. 13 to come up with a deal.