NAR, MBA and other groups warn against using mortgage g-fees as federal “piggy bank”

Rock-bottom mortgage rates are dangling an enticing revenue source in front of federal lawmakers: Guarantee fees, known as g-fees.

The American Bankers Association, the National Association of Realtors, the Mortgage Bankers Association and almost two dozen other industry groups sent a joint letter to Congress on Friday warning against using housing like a “piggy bank” to offset government spending.

The lower rates go, the more enticing it becomes to add a few basis points to g-fees because it won’t disqualify as many borrowers. But, the costs to consumers are high, the groups said. Hiking g-fees by 10 basis points equals an additional $5,100 in payments on a $255,000 loan over 30 years.

President Donald Trump’s recent budget proposal included an increase in g-fees as an offset to federal spending.

“We firmly believe that g-fees should only be used as originally intended: as a critical risk management tool to protect against potential mortgage credit losses,” the groups wrote. “Homeownership cannot, and must not, be used as the nation’s piggy bank.”