NAMB Calls for End to Hidden Tax on Homebuying Consumers

July 22, 2015
NAMB--The Association of Mortgage Professionals

NAMB—The Association of Mortgage Professionals is urging its membership to contact their U.S. Senators to oppose inclusion of an extension of increased Fannie Mae and Freddie Mac guarantee fees, commonly referred to as “G-fees,” in the omnibus highway bill that may be considered on the floor of the Senate as early as this week.

Originally enacted in 2011 and set to expire in 2021, the increased G-fees have essentially become a hidden tax on consumers being used to pay for unrelated federal programs, such as highway funding, according to the NAMB. G-fees are not readily detectable by borrowers in their mortgage documents since they are incorporated into the underlying rates paid by borrowers.

"Much of the rationalization for the increase in the G-fees was to bring private sector participation back into the market to compete against these higher GSE fees," said John Councilman, NAMB President. "This belief has proven to be faulty thinking since the increases have not attracted private capital to any real extent."

According to Councilman, government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac enjoy substantial protection from the many onerous laws and regulations present in the mortgage market that are not available to private investors and the higher G-fees only hurt homeownership rates.

"The only real result of these never-ending higher G-fees will be to discourage home ownership and to effectively price many more young and low to moderate income borrowers out of the market," said Councilman. "This is especially alarming given that rental costs are also making it difficult for the less affluent to find a place to live."

Compliance