Trump Budget Proposal Would Increase Fannie, Freddie Fees

Bloomberg writes that under President Trump's budget request, Congress would raise the total fees collected by Fannie Mae and Freddie Mac by 10 basis points (bps) to 20 bps, on top of the guaranty fee and other fees the GSEs already charge to backstop the MBS they issue. According to the Administration, the move would reduce the Federal budget deficit by $25.7 billion over the next decade. In 2011, Congress used a similar 10 bps fee to offset a payroll tax cut; that fee was set to expire in 2021. The President's budget request would keep that 2011 fee, double it to 20 bps, and extend it until 2023. Additionally, the request calls on Fannie and Freddie to stop allocating money to the affordable housing trust fund. While the article notes that this request is unlikely to pass Congress in its current form, it does provide a glimpse into the Administration's views on how to manage the GSEs, a view which may help shape GSE reform legislation and administrative action, especially as current Federal Housing Finance Agency Director Mel Watt’s term is set to expire next January.

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