U.S. lawmakers are considering federal legislation that would fund immigration reforms through higher guarantee fees on new home loans headed for the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. But mortgage bankers are pushing back.
The Temporary Payroll Tax Cut Continuation Act of 2011 was signed into law by President Obama on Dec. 23, 2011. Section 401 of the legislation requires borrowers on conventional agency loans to cover lost payroll taxes.
The law prompted the Federal Housing Finance Agency to direct Fannie Mae and Freddie Mac on Dec. 29, 2011, to increase their guarantee fees by 10 BPS on all mortgages delivered for inclusion into single-family mortgage-backed securities pools.
Now Congress is at it again.
H.R. 6429 proposes to pay for certain immigration reforms by raising g-fees charged on Fannie’s and Freddie’s single-family mortgages — effectively raising the cost of lending for future borrowers on conventional conforming loans.
In a statement issued Thursday, Mortgage Bankers Association President and Chief Executive Officer David H. Stevens said that the Washington, D.C.-based trade group is asking Congress to reconsider its strategy of using g-fees to cover expenditures beyond the cost of guaranteeing mortgage-backed securities.
According to the MBA chief, increasing mortgage costs will raise mortgage market uncertainty and slow the housing recovery.
“Fannie and Freddie’s guarantee fees are supposed to be used to help offset the risk inherent in providing mortgages, and any increases to those fees should be used for that purpose,” Stevens said in the statement. “Dipping back into the housing piggybank to pay for unrelated policy items on the backs of America’s homebuyers sends the wrong message at a time when the housing market is starting to show signs of recovery.”
