Senate Proposal Seeks More G-Fee Revenue from GSEs

A Senate budget resolution to reduce government spending over the next 10 years extends a 10 basis point fee on Fannie Mae and Freddie Mac loans for another two years.

Industry groups are complaining that Congress is continuing to use the GSEs as a “piggybank” to cover government spending.

Congress first approved the 10-bp guarantee fee hike in late 2011 to pay for a two-month extension of a payroll tax holiday. Fannie and Freddie implemented the g-fee hike in April 2012 and all the revenues go to the U.S. government.

The budget resolution, which is pending in the Senate, would extend the 10-bp g-fee through 2022 and 2023 and generate $7.6 billion in revenue.

The National Association of Realtors, Mortgage Banking Association and National Association of Homebuilders are urging budget committee members to remove the g-fee extension from the budget resolution.

“G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing g-fees for other purposes—as proposed by Senate Concurrent Resolution 8—effectively taxes potential homebuyers and other consumers looking to refinance their mortgages,” the joint letter says.

Separately, four senators introduced a bill last week that would prohibit Congress from raising GSE guarantee fees to offset other government spending. 

“The reality is that if Congress were to spend g-fee revenue from the GSEs on other programs, reforming these mortgage behemoths would become nearly impossible,” said Sen. Bob Corker (R-Tenn.).

Senators Mark Warner (D-Va.), Elizabeth Warren (D-Mass.), David Vitter (R-La.), and Corker are co-sponsors of the “Jumpstart GSE Reform Act.”

The bill also prohibits the Treasury Department from selling GSE preferred shares without congressional approval.