WASHINGTON – Dec. 8, 2015 – In a win for real estate, Congress last week approved a $305 billion transportation bill that includes no funding from an extension of mortgage guarantee fees as some lawmakers had proposed.
The bill provides reauthorization of several initiatives supported by the National Association of Realtors® (NAR), including programs to increase transportation safety and develop more pedestrian-friendly communities. But the big victory for real estate was something the bill did not have in it: The use of g-fees (guarantee fees) to pay for transportation programs.
President Obama signed the bill on Friday.
More than a fifth of Realtors across the country – about 197,000 members – responded to NAR’s Call for Action launched in October. Via email, these Realtors asked Congress not to use Fannie Mae and Freddie Mac guarantee fees (G-fees) paid by homebuyers to fund transportation initiatives. Some 600,000 letters were sent in what NAR calls its most forceful response ever to a Call for Action.
Since last summer, NAR has been arguing that proposals to use g-fee income from the two secondary mortgage market companies, Fannie Mae and Freddie Mac, to help cover costs of the bill would set a bad precedent and hurt homebuyers’ ability to obtain affordable mortgage financing.
“G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from loans that default,” NAR said last month in a joint letter with other industry organizations to Congressional leaders. “Increasing g-fees for other purposes imposes an unjustified burden on the housing finance system.”
Fannie and Freddie charge the fees to lenders to help cover their credit risks in return for guaranteeing conventional home mortgage loans originated by the lenders.
NAR President Tom Salomone says Congress’ decision not to include the fees in the bill will help prevent mortgage costs from rising, particularly for borrowers who would find any increase in costs a steep burden.
“This legislation recognizes the value of homeownership and the need to protect future homeowners from unnecessary costs,” Salomone said last week. “NAR applauds the conference committee for standing with the homeowners of today and tomorrow.”
Source: Realtor Magazine.
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