This was an excerpt of an e-mail from the president and CEO of NYCB Mortgage Company, a large national mortgage banker and one of the primary investors of many lenders.  Not only is this a disgraceful policy on it's face, it leaves the door open for future increases, handicapping the qualifications of buyers and homeowners.  We strongly urge everyone undertake their own organized campaign of reaching out to all of their contacts and clients to voice serious opposition to this attack on the housing finance system.


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On December 23, 2011, Congress and President Obama gave all homeowners and home buyers an ironic ‘present’ in the form of a 10 basis point increase in ‘g-fees’ for all mortgage loan products offered by Fannie Mae and Freddie Mac, in order to fund a two-month extension of a 33% payroll tax cut.  This shift in tax burden to homeowners and home buyers will remain in effect until October 2021, a period of almost 10 years.  Once fully adjusted, this will cost an already stressed group of Americans approximately .45%, almost one-half of one percent, of any amount they subsequently borrow to purchase a home, or refinance an existing home loan.

As you can imagine, we think this is an absurd and irresponsible way to finance a two-month tax cut and we encourage everyone to protest loudly to any politician within reach.  While there's little chance this law will be changed, it is nevertheless very important that we be heard, because this unprecedented use of credit guarantee fees for general Treasury purposes cannot be repeated.  If Congress somehow begins to perceive credit guarantee fees to be some sort of readily available "cookie jar" that can be used for whatever whim politicians believe appropriate, then this country's housing finance system will be in a world of real hurt.  The payroll tax extension will now expire on March 1, 2012; and you can be certain that efforts will be made to extend the tax cut through the November 2012 general election.  If it costs 10 bps to fund an extension for two months, just imagine what it would do to guarantee fees if they were used to fund a full year.

Thanks Congress!