Dear Congressman Sanford:
On behalf of National Taxpayers Union (NTU), I write in support of your legislation, H.R. 4893, the “Risk Management and Homeowner Stability Act.” This bill would prohibit Congress from using Fannie Mae and Freddie Mac’s guarantee fees as budgetary offsets for unrelated government spending.
Fannie and Freddie’s guarantee fees serve to protect the Government-sponsored Enterprises (GSEs) from credit losses in the event a borrower defaults on a mortgage. Though the guarantee fee is charged to the mortgage lender, the cost is ultimately borne by borrowers by way of higher interest rates on their mortgage. At various times, including last year during the debate over transportation funding, Congress has considered extending the guarantee fee, which is set to decline by 10 basis points at the end of 2021, and using such revenue as a budgetary offset for unrelated spending. Extending the GSEs’ guarantee fees is nothing more than a disguised tax increase on homeowners.
Using guarantee fees to pay for additional government spending would not only increase costs for homebuyers, but also add additional risk to the housing finance system. Unnecessary risk for Fannie and Freddie could spell trouble for the broader financial system as well as hardworking taxpayers.
NTU continues to support winding down Fannie and Freddie. This would allow a nascent private market for secondary mortgage purchases to provide additional liquidity to the housing finance system while eliminating the taxpayer backstop of the GSEs. Absent comprehensive housing finance reform, the “Risk Management and Homeowner Stability Act” provides much-needed protections for the financial system and hardworking taxpayers.
NTU is pleased to endorse H.R. 4893 and encourages all Representatives to cosponsor your bill and work towards its swift passage.
Sincerely,
Clark Packard, Counsel and Government Affairs Manager