Home Owners in Chattanooga and the surrounding area just received some good news by way of recent legislative action in Washington, D.C. In an important victory for home owners, the U.S. House recently approved a five-year highway bill that will not use guarantee fees (g-fees) collected by Fannie Mae and Freddie Mac to pay for transportation programs.
The Senate is expected to approve the measure, and President Obama will sign the legislation into law shortly thereafter.
The National Association of Home Builders (NAHB) led the charge to strip a provision that would have used g-fees to help offset a funding shortfall from the final legislation.
G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against credit-related losses on mortgages they have purchased or mortgage-backed securities they have guaranteed. NAHB has always maintained that these fees should only be used for their intended purpose – to protect against mortgage defaults and ensure the safety and soundness of Fannie Mae and Freddie Mac.
Despite strong opposition from NAHB, Congress voted in 2011 to enact a 10-year, 10 basis point increase in g-fees to fund the extension of the payroll tax cut. To help fund the long-term transportation bill, lawmakers subsequently proposed what would amount to a $1.9 billion tax on home owners by providing a four-year extension of the previous 10 basis point increase through 2025.
Working with legislators on both sides of the aisle, NAHB ultimately was able to get the g-fee provision removed from the final transportation bill. On behalf of home owners and the residential construction industry, the HBA of Greater Chattanooga extends a hearty “Thank You” to our local and area Congressional delegation for supporting this meaningful and much-needed legislation.