For much of last year, Congress engaged in a fight over the potential use of funds raised from Fannie Mae and Freddie Mac’s guarantee fees to cover federal spending.
Specifically, the use of g-fee funds to pay for a portion of a massive transportation bill was the subject of significant debate and several Congressional maneuvers, eventually leading to the removal of a controversial “pay-for” — the mechanism which funds the bill — that would have significantly delayed scheduled cuts in g-fees.
Now, new legislation introduced this week in the House of Representatives would ensure that a fight over the use of g-fees to fund federal spending will never happen, by permanently banning the use of g-fees as budgetary offsets.
Rep. Mark Sanford, R-SC, introduced the bill, called H.R. 4893 or the Risk Management and Homeowner Stability Act of 2016, earlier this week, along with Rep. Brad Sherman, D-CA, and Rep. Randy Neugebauer, R-TX.
The bill would amend the Congressional Budget and Impoundment Control Act of 1974 to prohibit the use of guarantee fees as budgetary offsets.
The bill isn’t the first time that legislators have tried to end the practice of using g-fees for federal spending.
Last year, Sen. Mike Crapo, R-Idaho, and Sen. Mark Warner, D-Va., introduced a budget point of order that would prevent g-fees from being used to offset federal spending, a practice the Senators call a “budgetary gimmick” and a “back door tax” on homeowners.
In a release, Sanford’s office shared a similar viewpoint as the impetus for this bill.
“This bill simply ensures that guarantee fees cannot be used as a budgetary offset outside of their intended purpose – to provide stability for the mortgage market,” Sanford’s office.
“Using g-fees to fund unrelated programs weighs down homeowners with an unnecessary burden and prevents Fannie Mae and Freddie Mac from appropriately managing risk,” Sanford’s office continued.
“Plus, using g-fees to offset spending creates an incentive to set the fees based on the need for new spending instead of the true cost of capital,” Sanford’s office concluded. “Homeowners shouldn’t be used as a national piggy-bank, and this bill will make sure that g-fees are used as they were intended.”