One of Georgia’s senators cosponsored an amendment to raise the federal home-loan guarantee limit, and both voted for it.
Georgia’s Republican senators, Saxby Chambliss and Johnny Isakson, crossed the aisle October 20 to provide necessary votes for a measure to increase Fannie’s and Freddie’s limits for home loan guarantees. The amendment to an appropriations bill required the support of 60 senators to avoid the Senate’s bill-killing filibuster rule. All Democrats and both Independents voted for passage but were eight votes short. Eight Republicans–including Chambliss and Isakson–stepped into the breach, voted “yea” and the amendment squeaked by: 60 votes for, 38 against. All 38 “nays” were from Republicans.
The amendment would raise the home-loan limit guaranteed by Fannie Mae, Freddie Mac and the Federal Housing Administration from $625,500 to $729,750, a total hike of $104.250 per loan. It would reinstate the temporarary increase authorized in the 2008 stimulus bill, which expired September 30, 2011.
Isakson spoke from the Senate floor before the vote. “Not extending these increases,” he stated, referring to the September 30 expiration of the higher limit, “caused a number of real estate transactions…to never close.” He also said Congress should not continue “to pass suppressing legislation or keep these loan limits down rather than doing things that will do no harm and help the housing industry” (emphasis added). A member of Chambliss’ staff explained, “At no cost to the government, the…amendment will provide a temporary boost to a housing market plagued with a lack of access to credit.”
Leaders of three grassroots organizations in Georgia also had something to say. “We are not guaranteed a house or a loan in the Constitution, Declaration of Independence or Bill of Rights,” said Jack Staver of the Northwest Georgia 9/12 Project. Jack Smith of the Tea Party of Gilmer County added, “The government should not guarantee private loans. Just look at the Solyndra loan,” referring to the $528 million Department of Energy loan made to the now-failed solar panel company. “The federal government should be out of the loan business,” said Conrad Quagliaroli, Woodstock tea party organizer. “Fannie Mae and Freddie Mac caused the housing bubble,” he said.
Both Chambliss and Isakson voted in favor of the appropriations measure, also known as the “Menendez-Isakson Amendment.” Isakson cosponsored the bill with Democratic Senator Bob Menendez of New Jersey. And Isakson served as the Republican amendment manager, whose duties included rounding up Republican support. “They are not representing Georgia, and both senators should be replaced,” Quagliaroli said regarding the senators’ participation in the amendment’s passage.
A key to the passage of the amendment seems to have been the inclusion of an additional government fee charged as part of the loan-origination costs. The new Premium Loan Fee would be charged on the $104,250 increased loan guarantee. The fee is stated in the amendment as 15 basis points (100 basis points equals one percentage point) which translates to a $156 add-on for the full increased amount of $104,250. So what’s the total financial impact expected for Fannie Mae, Freddie Mac and other federal load guarantors?
Remarkably, the Congressional Budget Office calculated that the U.S. government stands to receive a small net income from the amendment. A one-page CBO report was provided by Isakson’s office, with an explanation that official CBO scoring is done for authorization bills but not appropriation bills. It showed the following: Projected revenues collected from the new fee, minus government outlays for projected loan failures, would result in a net $12 million income projection for the government, for the 27 month period ending December 31, 2013.
Apparently, the CBO calculation was enough to justify Isakson’s do-no-harm statement, and likely helped garner the 60 votes needed for passage of the amendment. “I question CBO,” said Smith, “because they have been wrong, often due to incomplete information from Congress.” Quagliaroli added, “The government rarely–if ever—gets its projections right.” And the 38 Republican senators who voted “no” were apparently skeptical of raising the loan guarantee limit.
Allowing Fannie, Freddie and the others a higher loan-guarantee limit is not a done deal. There may be significant opposition in the Republican-controlled House of Representatives. And the old baseball adage applies to politics as well: “It ain’t over ’til it’s over.”
( Update note: The amendment passed in both houses of Congress.)
Sen. Chambliss’ Washington, D.C., office may be telephoned at 202-224-3521.
E-mail Chambliss here.
Sen. Isakson’s Washington, D.C. office may be telephoned at 202-224-3643.
E-mail Isakson here.
Roger Carter covers Sen. Chambliss for Tea Party Patriots’ Government Accountability Project. He can be reached at firstname.lastname@example.org