G-Fees Should Not Be Use as a Piggy Bank

As the congressional budget conference looks for ways to cut spending and increase revenue, bank and credit union trade groups urged them not to consider Fannie Mae and Freddie Mac’s guarantee fees, or g-fees, as a potential revenue source. Congress used a 10 basis point increase in the 2011 g-fee to fund two months of payroll tax relief, for example, which the groups said is already affecting potential homebuyers and refinancers.

“G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans,” the groups said. “Increasing g-fees for other purposes effectively taxes potential homebuyers and homeowners looking to refinance their mortgages.” They added that using g-fees as a revenue tool would constrain congressional options as the House and Senate take up housing finance reform in the coming months.

Read the letter.