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NAFCU, trades: Refrain from using GSE fees as funding offset
NAFCU joined with 32 other trade organizations spanning the housing finance ecosystem to urge Congress to "refrain from utilizing Fannie Mae and Freddie Mac ("the GSEs") guarantee fees ("g-fees") as a source of funding offsets." NAFCU has previously supported legislation to prohibit the use of guarantee fees as offsets for unrelated federal programs and has long advised against raising g-fees, which would raise borrower costs and could put a damper on lending.
The coalition, in the letter sent Friday, noted that 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- N.J., and Reps. Brad Sherman, D-Calif., and Lee Zeldin, R-N.Y., 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.
"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."
As the leading voice for credit unions with housing reform discussions, NAFCU has led efforts to ensure credit unions' unfettered access to the secondary mortgage market is maintained in any housing finance solution, and has consistently shared its core principles for housing finance reform with lawmakers and administration officials.