Three housing industry trade groups – the Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors – have sent a letter of concern to congressional leaders about funding the payroll tax holiday with an increase in the credit risk guaranty fees (G-fees) charged by the government-sponsored enterprises (GSEs).
‘We strongly objected to this provision as an inappropriate use of the fees charged by the GSEs to manage risk and enhance capital,’ the letter said. ‘Additionally, we believe this provision hinders necessary housing finance reforms in the years ahead, as any effort to alter the GSEs' role in the market would result in a loss of federal revenue.’
The trade groups argued that G-fees should be reserved for minimizing the loss exposure to the GSEs, investors and taxpayers.
‘Many market analysts have expressed concern that G-fees will increase even higher than the 10 basis points (bps) called for in the legislation,’ the letter said. ‘For example, the [proposed legislation] states that average G-fees for 2012 originations must be at least 10 bps higher than for 2011 originations. However, the Federal Housing Finance Agency calls for implementation beginning April 1. Therefore, with no increase during the first quarter of 2012, the average G-fee increase for 2012 will be less than 10 bps without another G-fee increase later in the year.’