[Congressional Record Volume 145, Number 38 (Wednesday, March 10, 1999)]
[Senate]
[Pages S2529-S2530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        GINNIE MAE GUARANTY FEE

 Mr. GORTON. Mr. President, my colleague, Senator Grams, 
introduced S. Con. Res. 16 last week. I am a cosponsor of that 
legislation expressing the Sense that the Government National Mortgage 
Association (Ginnie Mae) guaranty fee should not be increased.
  Ginnie Mae was established to help provide affordable homeownership 
opportunities for all Americans by facilitating the sale of securities 
backed by mortgages insured or guaranteed by the Federal Housing 
Administration, the Department of Veteran's Affairs, and the Rural 
Housing Service. The Ginnie Mae guaranty assures investors in the 
securities that they will receive all payments due in a timely manner. 
Ginnie Mae assesses a fee on lenders who issue such securities and 
notes for this guaranty. Currently, lenders are charged six basis 
points per loan.
  The Ginnie Mae mortgage-backed securities program has been a 
universal success. Almost 19 million homes have been financed through 
Ginnie Mae securities. Ginnie Mae creates a way for Americans who are 
unable to find other financing options to partake in the dream of 
homeownership. More than 95 percent of all FHA and VA mortgages are 
securitized through Ginnie Mae. It is no secret that first-time 
homebuyers comprise more than two-thirds of FHA home purchase loans and 
that about 34 percent of FHA borrowers are minorities. In its most 
basic form, Ginnie Mae creates homeownership opportunities for those 
borrowers who are typically unserved or underserved by the conventional 
mortgage markets.
  During the last Congress, there were several attempts to increase the 
Ginnie Mae guaranty fee. Fortunately, most of these attempts failed. 
However, an increase of three basis points was adopted during 
deliberations on the Higher Education Reauthorization Act effective in 
2004. All of the attempts sought to use the revenue gained by the 
increase to pay for spending elsewhere. This pattern must be stopped. 
Not only should Congress refuse to raise the guaranty fee under any 
circumstances, but it should also seek to have this arbitrary increase 
repealed prior to effect.
  I believe that any increase in the Ginnie Mae guaranty fee is an 
unnecessary tax on homeownership that would cost homebuyers hundreds of 
dollars in additional expense at closing and prevent thousands of 
families from achieving the dream of homeownership. It would defeat the 
very mission of Ginnie Mae.
  In addition, an increase in the Ginnie Mae guaranty fee has 
absolutely no financial basis. Recently, the independent auditor, KPMG, 
confirmed that Ginnie Mae is financially sound. In fact, Ginnie Mae had 
a record profit of

[[Page S2530]]

$601 million in 1997. In that year alone, Ginnie Mae collected a total 
of $326 million in guaranty fees. It paid out only $11 million in 
unreimbursed claims. It is apparent that Ginnie Mae does not need the 
financial boost from the increase fee.
  Even in this era of low interest rates, the dream of homeownership is 
elusive for many American families. Extensive efforts should be made to 
eliminate the barriers to affordable housing. Any increase in the 
Ginnie Mae guaranty fee creates a substantial impediment to 
homeownership. Such a result is unacceptable.
  I ask Senators to please join me in opposing this unjustified tax on 
homeownership.

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