House Kills Payroll Tax Extension & Guarantee Fee Hike In The Process

From National Mortgage News: Keep in mind again, the guarantee fees were not why the bill was killed and if there is a compromise it is likely to include this fee increase.

House Republicans Tuesday afternoon killed a Senate-passed compromise on a short-term extension of the payroll tax cut that is funded, in part, by hiking the guarantee fees charged to seller/servicers by Fannie Mae and Freddie Mac.

House GOP lenders want to conference with the Senate on a full-year extension. But Senate majority leader Harry Reid, D-Nev., maintains he will not start negotiations until the House passes the two-month extension that the Senate approved Saturday by a 89-10 vote.

It appears a stalemate is developing that could kill the payroll extension bill – and effectively, the g-fee increase.

Such an outcome would be welcomed by many in the housing finance  industry, including the Mortgage Bankers Association, and its CEO David Stevens.

Stevens is concerned the 10 basis point hike in g-fees will increase the cost of home financing just to pay for the extension bill (H.R. 3630).

Over 10 years, the g-fee hike would generate $35 billion with that money flowing directly into the U.S. Treasury — not to housing programs/support  for Fannie and Freddie.

“The idea that you should pass a ten-year tax increase for two months of payroll tax relief is appalling,” Stevens said in a statement.  “Policymakers need to go back to the drawing board and come up with a thoughtful, comprehensive approach to paying for the payroll tax holiday, one that doesn’t increase taxes by thousands of dollars on homebuyers, at a time when the housing market is already struggling,” Stevens said.

The payroll tax holiday expires at the end of this month.

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