The CALIFORNIA ASSOCATION OF REALTORS® (C.A.R.) is opposing a proposal in Congress to impose a hidden tax on mortgages to pay for highways. Congress is seeking to disguise this tax by calling it a “fee.”
C.A.R. is asking that all California REALTORS® contact their Member of Congress to ask that the House not include this tax in the long-term Transportation funding bill.
A portion (in the form of a fee) of every conforming loan, (those backed by Fannie Mae and Freddie Mac) is used to offset losses from bad loans and to pay for the administrative costs of running these companies. These are called guarantee fees (or g-fees). In 2011 Congress added on a tax of an additional 10 Basis Points, equal to .1% of the value of the loan, to the guarantee fee of every new loan to fund an extension of unemployment benefits. That “add on” tax was due to expire in 2021 and loans originated after that date would not be subject to the additional fee.
The U.S. Senate just passed a long-term transportation funding bill that extends the “add-on” fee until 2025 for all new mortgages in order to pay for transportation infrastructure. As an example using real numbers, buyers purchasing a median priced California home of $489,560 using a typical conforming loan with a 20% down payment and a 4% interest rate will pay an additional $8,100. This figure is sure to rise with an increase in sales prices. This "g-fee" is actually a disguised tax on homebuyers.
This “fee” for highways unfairly burdens homebuyers for something not related AT ALL to their mortgage. And it will also erode housing affordability by adding another $8,000 to the cost of a median priced home.
C.A.R. opposes this tax because of its impact on homebuyers and housing affordability and believes that g-fees should only be used to reduce Fannie Mae and Freddie Mac’s (and therefore the taxpayers’) exposure to the risks associated with guaranteeing a mortgage and for the operation of these companies. A mortgage tax will also make it more difficult to enact meaningful mortgage finance reform because, going forward, Congress would need to offset the “cost” of reducing or eliminating the tax.
Please oppose this tax by responding to C.A.R.’s Call-for-Action.
Click here for more details and to take action today for more details and to take action today.
