The Senate has passed, as amended, the Middle Class Tax Relief and Job Creation Act, HR 3630, extending the payroll tax holiday for two months and increasing the guarantee fees charged by Fannie Mae and Freddie Mac for assuming the risk of mortgage-backed securities. The legislation will be taken up by the House early next week. The House version of the legislation also contained language raising the GSE guarantee fee to help pay for the tax relief extension.
The legislation increases the guarantee fees that are charged to mortgage lenders with respect mortgage-backed securities by Fannie Mae and Freddie Mac by 10 basis points. The increase in the fees will be adjusted so that they only cover the cost of the bill. Revenue generated by the increase is deposited directly into the United States Treasury. The increase in the annual premium expires in ten years. This change does not affect the upfront premium charged by FHA for insuring loans.