Raising guarantee fees on Fannie Mae and Freddie Mac loans “effectively taxes homebuyers and homeowners looking to refinance their mortgages,” according to a joint letter by nine industry groups.
The joint letter comes on the heels of a Congressional Budget Office report that suggests 103 options for decreasing federal spending or increasing federal revenue over the next decade.
One option includes raising Fannie and Freddie g-fees by 10 basis points to 60 basis points beginning October 2014 through 2023. That would “reduce net government spending by $19 billion,” the CBO estimates.
The CBO acknowledges such a g-fee hike would increase borrowing costs and it “could weaken the housing market,” which is recovering slowly. “That concern is particularly salient because mortgage delinquency rates remain high, and many borrowers are still underwater.”
The CBO released the report Wednesday.
Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis., head up the deficit reduction effort and they are charged with coming up with the budget agreement by Dec. 13.
Mortgage Bankers Association chief lobbyist Bill Killmer noted that Congress raised g-fees by 10 bps in 2011 and that g-fee hike remains in effect through 2020.
Raising g-fees again just shifts the cost burden to homebuyers, Killmer says, as “opposed to other tough decisions that need to be made on tax revenue and spending cuts.”