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Just Say No to Mortgage Tax

October 14, 2015

CapitolAs a Realtor® it is my job to keep you informed of important issues and news which can affect you and your home. There is an issue that has already cost homebuyers additional money in tax fees since 2011, which could now cost homebuyers for another ten years. I am talking about a Mortgage Tax which has been disguised as a guarantee fee within mortgage loans. A guarantee fee, or G-Fee as it is commonly known, is a standard fee included with any conforming loan, those which are backed by Fannie-Mae or Freddie-Mac. These G-Fees are what covers the administration costs of these types of loans, which is a clear, acceptable and standard feature.

However, four years ago Congress added 10 Basis Points, or 1% of the value of a conforming loan in order to extend unemployment benefits. This meant for every new mortgage loan, buyers are paying an additional amount of money for a government program which they may or may not directly benefit from. This add-on tax is set to expire in 2021. Unfortunately the U.S. Senate is seeking to extend this expiration date and to use the add-on tax to now help fund transportation infrastructure projects for the long term, through the year 2026.

The California Association of Realtors®, myself included, say no to this added tax. The Senate has passed this tax liability, but the House of Representative has not yet voted. If they do pass this continued add-on to the G-Fees of conforming loans, this could make buying a new home cost prohibitive to many families. We feel it adds an undue burden to a specific group of people, hardworking families who are finally getting their dream fulfilled by purchasing a home. To get a clearer picture for what this could mean to you if you are seeking to buy a house here is an example of what this tax could cost:

Taking the median price of a home in California, at $489,650, with a 20% down payment and 4% interest rate, the additional Mortgage Tax included in the G-Fee would result in an additional $8,100 out-of-pocket costs to the homebuyer. We in the industry say this is too much.

As such, there is something we can do about it. We can share this information with others, and call our Congress men and women to tell them we do not support this heavy additional tax on families. The U.S House of Representatives website has links to each rep and how to contact them. Extending and changing the G-Fee is not a solution to the big issue of transportation infrastructure and is too much to place on the shoulders of one group of our residents. Instead of encouraging and enabling more people to buy a home of their own, a tax such as this could turn things the other way and prohibit many from achieving their dream of homeownership.

Social Media is a powerful tool we can all use to help spread the message and get the attention of Congress. There is a Facebook page you can like and share, No Mortgage Tax. You can also follow the campaign on Twitter @NoMortgTax and tweet using the hashtag #NoMortgageTax.

Whatever you do, I encourage you to share this information and help our voices be heard. Homebuyers should not be penalized for working toward and achieving the dream of home ownership. As a Realtor® who supports your clients, I will continue to do what I can to help Congress hear us and listen. When you are ready to sell or buy a home, my team and I are ready to help you through the entire process. Our goal is to make your experience both easy and pleasurable. Contact us today at (925) 634-7820, or by email at

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