In an important victory for NAHB and home owners, the House today approved a five-year highway bill that will not use guarantee fees (g-fees) collected by Fannie Mae and Freddie Mac to pay for transportation programs.
The Senate is expected to approve the measure tomorrow and President Obama will sign the legislation into law shortly thereafter.
NAHB led the charge to strip a provision that would have used g-fees to help offset a funding shortfall from the final legislation.
G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against credit-related losses on mortgages they have purchased or mortgage-backed securities they have guaranteed. NAHB has always maintained that these fees should only be used for their intended purpose – to protect against mortgage defaults and ensure the safety and soundness of Fannie Mae and Freddie Mac.
Despite strong opposition from NAHB, Congress voted in 2011 to enact a 10-year, 10 basis point increase in g-fees to fund the extension of the payroll tax cut. To help fund the long-term transportation bill, lawmakers subsequently proposed what would amount to a $1.9 billion tax on home owners by providing a four-year extension of the previous 10 basis point increase through 2025.
In an official statement, NAHB Chairman Tom Woods called it “outrageous” that Congress would consider using a g-fee hike to pay for transportation programs unrelated to the housing government sponsored enterprises.
“With first-time home buyers still hesitant to enter the marketplace, it makes no sense to impose what amounts to a new tax on homeownership that will disproportionately affect low- to moderate-income borrowers. Homeownership cannot, and must not, be used as the nation’s piggybank.”
Working with our Democratic and Republican allies in the House and Senate, NAHB ultimately was able to get the g-fee provision removed from the final transportation bill.