Senators: Don’t use mortgage fees to pay for highway bill

A bipartisan pair of senators Wednesday urged Senate leaders to uphold a budget rule blocking revenue generated from an extension of guarantee fees on mortgage-backed securities from being used to help pay for transportation projects.
 
Sens. Mark Warner (D-Va.) and Mike Crapo (R-Idaho) told Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Harry Reid (D-Nev.) that dipping into a $1.9 billion pot of guarantee fees to offset the cost of the Senate’s $47 billion six-year bill is prohibited under a budget point of order passed in May.
 
{mosads}“Further increases in guarantee fees should be used to protect taxpayers from mortgage losses and as repayment for the bailout, not for unrelated programs,” they wrote in a letter to McConnell and Reid.
 
“Each time guarantee fees are extended, increased or diverted for unrelated spending, homeowners are charged more for their mortgages and taxpayers are exposed to additional risk,” they wrote.
 
In May, Congress approved a budget resolution that included a point of order by Crapo and Warner, both members of the Senate Banking Committee, prohibiting the use of guarantee fees for unrelated federal spending.
 
Guarantee fees, which are charged by government-controlled mortgage giants Fannie Mae and Freddie Mac, protect against potential losses from loan defaults.
 
The fees are set to start declining in 2021.
 
Crapo and Warner say using the revenue from the guarantee fees in spending legislation double-counts revenue and violates pay-as-you-go rules.
 
The bill is already facing an uphill battle, with issues arising on all sides.
 
Reid on Wednesday said he is concerned about some of the proposed pay-fors in the bill, which was negotiated by McConnell and Sen. Barbara Boxer (D-Calif.).
 
Mortgage and housing industry leaders have blasted the plan and are pressing for another funding mechanism to help pay for the measure.
 
“Taxing homebuyers, which is the practical effect of increasing guarantee fees, to pay for unrelated government spending like this, is simply bad policy,” said David Stevens, head of the Mortgage Bankers Association.
 
“It’s bad for borrowers, it’s bad for the housing market and it’s bad for the economy, just as all three are finally showing signs of recovering from the 2008 meltdown,” Stevens said.
 
Tom Woods, chairman of the National Association of Home Builders, called it “outrageous” that Congress would consider using the fees to pay for programs unrelated to housing.
 
“With first-time home buyers still hesitant to enter the marketplace, it makes no sense to impose what amounts to a new tax on homeownership that will disproportionately affect low- to moderate-income borrowers,” Woods said.
 
“These fees should only be used for their intended purpose — to protect against mortgage defaults and ensure the safety and soundness of the housing finance system,” he said.