The mortgage industry is having growing concerns about a payroll tax relief measure that would raise GSE guarantee fees by 12.5 basis points, using the additional revenues to pay for other government programs.
The text of a bill sponsored by Sen. Bob Casey, D-Pa., dictates that the revenues generated by the g-fee increase will be deposited in the U.S. Treasury.
Moreover, the higher g-fees charged by Fannie Mae and Freddie Mac cannot be used to reimburse the "federal government for the costs or subsidy provided to an enterprise," according to the bill. (Fannie and Freddie are known as government-sponsored enterprises.)
This siphoning of g-fees to pay for tax extensions is raising concerns among mortgage and housing industry officials.
"The National Association of Realtors is opposed to this provision and we have raised our concerns with members of Congress about the revenue being used to fund programs outside of housing," a NAR spokeswoman said.
Rob Zimmer, who represents the Community Mortgage Lenders of America in Washington, noted that the mortgage industry is prepared to accept higher guarantee fees that accurately reflect the actual risk of the mortgages. "It is not ready to entertain higher prices just to fund unrelated parts of the federal budget," Zimmer said.
The Housing Policy Council also is concerned about the diversion of mortgage g-fees. "We do not believe it is good policy to divert the guarantee fees to pay for other federal programs," said HPC vice president Paul Leonard. HPC is part of the Financial Services Roundtable.
The increase in the g-fee is projected to raise $38 billion over 10 years. The Casey bill also uses a surtax on millionaires to offset the cost of the one-year extension of the payroll tax holiday.
Senate Democratic leaders are threatening to keep Congress in session through the Christmas holiday if Republicans continue to block what the Democrats call a "middle-class tax cut."
