Two congressmen have introduced a bill that would permanently ban using Fannie Mae and Freddie Mac guarantee fees to cover federal spending not related to mortgages.
Guarantee fees, or g-fees, are charged to cover the GSEs’ costs for guaranteeing mortgages should borrowers fail to pay. In 2015, Congress battled over the use of g-fees to pay for part of a transportation bill. Eventually, the mechanism allowing g-fees to fund the bill – which would have delayed scheduled cuts to the fees – was removed.
Last year, Rep. Mark Sanford (R-S.C.), Rep. Brad Sherman (D-Calif.) and Rep. Randy Neugebauer (R-Texas) introduced a bill that would permanently ban the use of the fees as budget offsets. The bill wasn’t successful, but now Sanford and Sherman are reintroducing it, according to a HousingWire report.
“This bill simply ensures that guarantee fees can’t be used as a budgetary offset outside of their intended purpose, which is to provide stability for the mortgage market,” Sanford said. “G-fees should be used to protect taxpayers from risk, but using them to fund unrelated programs weighs down homeowners with an unnecessary burden, exposes taxpayers to additional risk, and prevents Fannie Mae and Freddie Mac from appropriately managing this risk.”
“Past proposals have attempted to use g-fees to pay for unrelated government spending on the backs of homeowners,” Sherman said. “G-fees are a critical risk-management tool, and they should continue to be used only for that purpose.”