The Senate is betting on an increase in mortgage fees that Fannie Mae and Freddie Mac are indirectly charging consumers to help pay for traditional infrastructure.
According to legislative text Unveiled for the first time today by the US Senate, the extension of guarantee fees to 2032 will result in a $ 21 billion out of the $ 579 billion plan to repair roads, expand rural broadband, and modernize the power system.
In 2011, Congress added 10 basis points to g-levy rates to pay for a three-month payroll tax cut. This increase was due to end this year in September.
Instead, the infrastructure package contains language to change the year of expiration from 2021 to 2032. This means that the increased guarantee fees will remain in effect for the next decade, depending on when the increase takes effect.
Freddie Mac and Fannie Mae charge lenders additional fees to cover credit losses from borrower defaults, administrative costs, and capital repayment. In 2019, G-commission averaged 58 basis points for a 30-year fixed rate loan. This increase is passed on to borrowers in the form of a higher interest rate.
According to the spokesman, lenders usually pass the additional costs onto borrowers. Federal Agency for Housing Financewhich is regulated by Fannie Mae and Freddie Mac. This person would not say how much of the g commission is paid by the lender and not the borrower.
Last week, both affordable housing advocates and stakeholders condemned the use of guarantee fees to pay for a bipartisan infrastructure package that lacks a housing component.
The two dozen groups that signed the letter against the increase in tariffs included trade groups such as Mortgage Bankers Association, letter AAmerican Bankers Association and Housing Policy Council; affordable housing advocates such as National Housing Conference, as good as National Association of Realtorswhich represents real estate brokers.
Bill Killmer, MBA senior vice president of legislative and policy affairs, called the hike “a tax on home consumers with a single purpose: managing risk [Government Sponsored Entities] loan portfolio to pay off for some other purpose. “
IN infrastructure package must first go through an open amendment process where the entire Senate can call for amendments. Once this process is complete, the Senate will vote on a single amendment or amendment at the end of the procedure to incorporate those changes. The Senate will then vote on the bill, which requires 60 votes to be passed.
After that, the bill will be considered by the House of Representatives. This is not expected to happen until August, the month when many members of Congress are working in their constituencies.
At this stage, the House of Representatives could pass the law and send it to President Joe Biden. However, it is more likely that there will be some changes that will need to be agreed at a conference between the two chambers. After that, both chambers will vote again for an updated version of the bill.
As difficult negotiations on a bipartisan infrastructure bill continue, Senate Democrats are pushing for a parallel $ 3.5 Trillion Infrastructure Bill which will include social infrastructure programs, including provisions related to housing affordability.