Removing Barriers Blog

CUNA Thanks Representative Sherman for Co-Sponsoring G-Fees Bill
Posted April 29, 2016 by Chandler Schuette

Today we thanked Rep. Brad Sherman (D-Calif.) in a letter for co-sponsoring the Risk Management and Homeowner Stability Act (H.R. 4893). The bill was introduced in April by Rep. Mark Sanford (R-S.C.).

H.R. 4893 would prohibit the use of guarantee fees to offset unrelated federal spending. Government-sponsored entities (GSEs) Fannie Mae and Freddie Mac charge lenders guarantee fees, or g-fees, primarily to protect against credit-related losses in the mortgages they back.

In 2011, those fees were raised by 10 basis points until 2021, to fund a two-month extension of  a payroll tax cut.

Our letter to Sanford stated that using guarantee fees for purposes entirely unrelated to housing is not sound public policy. The GSEs charge these fees specifically to offset the risk of guaranteeing payment of principal and interest on loans packaged into agency securities; artificially inflating these fees can elevate housing costs above natural rates, putting homeownership out of reach for many American families at a time when the housing market is still in recovery. 

We successfully fought to keep g-fees from being extended and used to fund highway programs last year, citing similar concerns about the fees’ effect on homeowners and the housing sector.