Despite being overwhelmingly defeated in the House of Representatives, the Senate is still considering a controversial spending mechanism that would see the fees charged by Fannie Mae and Freddie Mac to guarantee loans go to pay for new roads.
But one Senator is urging his colleagues to consider the implications of using g-fees to offset the cost of a Federal highway bill.
In a letter sent to 13 fellow Senators, Sen. Mike Crapo, R-Idaho, urges his colleagues to reconsider the inclusion of a “pay-for” in the a massive transportation bill that would have used g-fees to offset the cost of the bill.
A pay-for is the mechanism that funds the bill, and the Senate version of the Developing a Reliable and Innovative Vision for the Economy Act, also called the DRIVE Act, still contains a pay-for that would significantly delay scheduled cuts in g-fees.
Increases in Fannie and Freddie’s g-fees, which were originally put in place in 2011, are set to decline by 10 basis points at the end of 2021.
To fund part of the transportation bill, the decrease in g-fees would be delayed until the end of 2025 – a four-year extension of the increased g-fees.
The House of Representatives passed its version of the DRIVE Act earlier this month, but the g-fee pay-for was removed by a wide margin.
First, the House approved an amendment put forth by Rep. Randy Neugebauer, R-Tex., and Bill Huizenga, R-Mich., which removed the g-fee pay-for, by a vote of 354-72.
The House then voted on the full bill, and passed it with by a vote of 363-64.
Earlier this year, Crapo, and Sen. Mark Warner, D-Va., introduced 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.
Later, Crapo and Warner sent a letter to Senate Majority Leader Mitch McConnell, R-Ky., and Senate Minority Leader Harry Reid, D-Nev., saying that any increase or extension of g-fee standards should be used to protect taxpayers from mortgage losses and to repay the federal bailout, not for unrelated programs.
In Crapo’s latest letter, he argues that using the g-fees in to fund federal spending legislation is not only a violation of the Fiscal Year 2016 Budget Resolution, it also hurts homeowners.
“Each time guarantee fees are extended, increased and diverted for unrelated spending, homeowners are charged more for their mortgages and taxpayers are exposed to additional risk,” Crapo writes. “Attempts to increase or extend these fees makes it more difficult to reform our housing system and wind down Fannie Mae and Freddie Mac.”
Crapo’s letter is addressed to Sen. Jim Inhofe, R-Okla.; Sen. John Thune, R-SD; Sen. Orrin Hatch, R-Utah; Sen. Lisa Murkowski, R-AK; Sen. Deb Fischer, R-Neb.; Sen. John Barrasso, R-WY; Sen. John Cornyn, R-Tex.; Sen. Barbara Boxer, D-Calif.; Sen. Sherrod Brown, D-Ohio; Sen. Bill Nelson, D-Fla.; Sen. Ron Wyden, D-OR; Sen. Dick Durbin, D-Ill.; and Sen. Charles Schumer, D-NY.
“I urge you to follow-through on the commitment in the Budget Resolution to not use Fannie Mae and Freddie Mac as a piggybank,” Crapo concludes.
