Skip to main content

Rep. Royce Introduces Pay Back the Taxpayers Act to Prevent GSEs Funding Housing Advocacy Groups

NationalMortgageProfessional.com
Jan 28, 2015

U.S. Rep. Ed Royce (R-CA) has announced plans to introduce the "Pay Back the Taxpayers Act of 2015," legislation that prohibits Fannie Mae and Freddie Mac from diverting funds to the Housing Trust Fund and the Capital Magnet Fund in accordance with the Federal Housing Finance Agency’s (FHFA) interpretation of the Housing and Economic Recovery Act of 2008 (HERA).

“We heard directly today from Fannie and Freddie's regulator that while they remain under-capitalized and over-leveraged, it is the right time to start siphoning money away from these taxpayer-backed GSEs to questionable housing groups,” said Rep. Royce. "Anyone who witnessed the financial crisis knows exactly how this will play out. A larger government presence in housing distorts the market and promotes a boom-and-bust cycle that leaves taxpayers holding the bag. Coupled with the recent decision by the FHA to reduce mortgage premiums, it appears that the Administration is taking us in the complete wrong direction when it comes to stabilizing housing markets. The Pay Back the Taxpayers Act will preempt payments from the GSEs to housing advocacy groups and instead reroutes them where they belong: with the taxpayers.”

Under current law, the FHFA is required to suspend allocations to the funds if such payments would: Contribute to the financial instability of the GSEs; cause the GSES to be undercapitalized; or prevent the GSEs from successfully completing a capital restoration plan.

The Pay Back the Taxpayers Act removes any ambiguity under the law and states that no funds from Fannie and Freddie can be used to fund the national Housing Trust Fund while the GSEs are in conservatorship or receivership. In light of FHFA Director Mel Watt’s recent decision to reverse course on the funds’ capitalization, the bill includes a prohibition on any future transfers from the GSEs to the funds and will require any payments that have already been allocated or set aside be instead used to reduce the budget deficit.

In late January, Rep. Royce questioned FHFA Director Mel Watt at the House Financial Services Committee hearing entitled “Sustainable Housing Finance: An Update From the Director of the Federal Housing Finance Agency” as to why he has directed the GSEs to fund these housing groups when the GSEs are over-leveraged and undercapitalized. 

Published
Jan 28, 2015
CFPB Reports Trends In Financial Assistance

The latest developments from this study reveal that most consumers have exited the payment assistance they received at the start of the pandemic.

Analysis and Data
Jul 14, 2021
CFPB Orders GreenSky To Refund $9M In Unauthorized Loans

The consent order requires GreenSky to refund or cancel up to $9 million in loans for the customers harmed by this illegal conduct.

Regulation and Compliance
Jul 13, 2021
CFPB Warns Landlords And Consumer Reporting Agencies To Report Accurate Rental Information

Inaccurate rental or eviction information can unfairly block families and individuals from safe, affordable housing.

Regulation and Compliance
Jul 01, 2021
FHFA Mandates Quarterly Fair Lending Reports

FHFA issued orders for all enterprises to submit quarterly Fair Lending Reports with data and information to improve the FHFA’s capabilities. 

Regulation and Compliance
Jul 01, 2021
FHFA Follows CFPB To Protect Borrowers Once COVID-19 Foreclosure And Eviction Moratoriums End

The Federal Housing Finance Agency made it clear that Fannie Mae and Freddie Mac servicers are not permitted to make first notice or filing for foreclosure that would be prohibited by the CFPB protections for borrowers affected by COVID-19.

Regulation and Compliance
Jun 30, 2021
CFPB Finds Evidence Of Redlining And Deceptive Acts In 2020

Enforcement actions resulted in more than $124 million in consumer remediation and civil money penalties in 2020

Regulation and Compliance
Jun 29, 2021