Bill Raising G-Fees Faces Tough Battle

Thanks to John T. Mechem, Vice Presidentrnof Communications at the Mortgage Bankers Association (MBA) we learned a littlernmore about The STEMS Jobs Act which passed the House of Friday in a 245 to 139rnparty line vote.   MBA President David Stevens had earlier urgedrnthe House to reject one provision of the legislation.</p

As MND reported on Friday,rnthis is essentially an immigration bill, a controversial one, that, asrnoriginally filed, would grant an increased number of work visas to foreignrnnationals with advanced degrees in so-called STEM fields (science, technology,rnengineer, and mathematics) earned in the U.S.  The original bill contained no reference tornmortgage fees. </p

Once the bill was in the House RulesrnCommittee, its sponsor, Lamar Smith (R-TX) requested the addition of a Manager’srnAmendment intended to bring the bill into compliance with so-called “payfor”rnrules; i.e., that legislation cannot be financed through deficit spending.  Smith’s amendment would extend by one yearrncertain fees and premiums included in title IV of Pub. L. 112-78, the TemporaryrnPayroll Tax Cut Continuation Act of 2011.</p

Remember December 23, 2011 when Pub. Lrn112-78 became law?  Cable news wasrnbreathlessly following its progress, holiday vacations were postponed, and wagernearners worried that the bill would not pass and the temporary 2 percentagernpoint discount in Social Security taxes would disappear on January 1.  No one paid a lot of attention to Title IVrnwhich raised GSE guarantee fees by “notrnless than an average increase of 10 basis points for each origination year orrnbook year above the average fees imposed in 2011 for such guarantees.”  The law further prohibits either of therngovernment sponsored enterprises, Freddie Mac and Fannie Mae, from “offsettingrnthe cost of the fee to mortgage originators, borrowers, and investors by decreasingrnother charges, fees, or premiums, or in any other manner”  Further, the law requires that the fees berndeposited directly into the U.S. Treasury, and be “available only to the extentrnprovided in subsequent appropriations Acts”  and not be considered a reimbursement to thernFederal Government for the costs or subsidy provided to an enterprise.  In other words, these fees are not designedrnto price risk but rather as a fund raising mechanism for other governmentrnpurposes.  These fees increase throughrnthe expiration of Title IV on October 1, 2021 which Smith’s amendment wouldrnextent to October 1, 2022 adding another 10 basis points to the ultimate totalrnincreases. These fees would either be paid by mortgage originators or, morernrealistically, passed through to borrowers in the costs of their loan.</p

We noted above that the STEMS Jobs Act is controversial.  The Hispanic community opposes it becausernthey claim it gives preference to one class of immigrant over another; thernSenate and the Administration oppose it because it is not the comprehensivernimmigration bill they ultimately seek. It appears unlikely it will pass intornlaw in its present form and there is speculation that Senate Majority LeaderrnHarry Reid will not even bring the Senate version of the bill to the floor forrna vote.  </p

For those wishing to follow the progress of the legislation,rnthe bill number is HR 6429 (we incorrectly reported this earlier as HR 1629)rnand it can be tracked on the Thomas-Libraryrnof Congress website.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.