Thanks to John T. Mechem, Vice President of Communications at the Mortgage Bankers Association (MBA) we learned a little more about The STEMS Jobs Act which passed the House of Friday in a 245 to 139 party line vote.   MBA President David Stevens had earlier urged the House to reject one provision of the legislation.

As MND reported on Friday, this is essentially an immigration bill, a controversial one, that, as originally filed, would grant an increased number of work visas to foreign nationals with advanced degrees in so-called STEM fields (science, technology, engineer, and mathematics) earned in the U.S.  The original bill contained no reference to mortgage fees.

Once the bill was in the House Rules Committee, its sponsor, Lamar Smith (R-TX) requested the addition of a Manager's Amendment intended to bring the bill into compliance with so-called "payfor" rules; i.e., that legislation cannot be financed through deficit spending.  Smith's amendment would extend by one year certain fees and premiums included in title IV of Pub. L. 112-78, the Temporary Payroll Tax Cut Continuation Act of 2011.

Remember December 23, 2011 when Pub. L 112-78 became law?  Cable news was breathlessly following its progress, holiday vacations were postponed, and wage earners worried that the bill would not pass and the temporary 2 percentage point discount in Social Security taxes would disappear on January 1.  No one paid a lot of attention to Title IV which raised GSE guarantee fees by "not less than an average increase of 10 basis points for each origination year or book year above the average fees imposed in 2011 for such guarantees."  The law further prohibits either of the government sponsored enterprises, Freddie Mac and Fannie Mae, from "offsetting the cost of the fee to mortgage originators, borrowers, and investors by decreasing other charges, fees, or premiums, or in any other manner"  Further, the law requires that the fees be deposited directly into the U.S. Treasury, and be "available only to the extent provided in subsequent appropriations Acts"  and not be considered a reimbursement to the Federal Government for the costs or subsidy provided to an enterprise.  In other words, these fees are not designed to price risk but rather as a fund raising mechanism for other government purposes.  These fees increase through the expiration of Title IV on October 1, 2021 which Smith's amendment would extent to October 1, 2022 adding another 10 basis points to the ultimate total increases. These fees would either be paid by mortgage originators or, more realistically, passed through to borrowers in the costs of their loan.

We noted above that the STEMS Jobs Act is controversial.  The Hispanic community opposes it because they claim it gives preference to one class of immigrant over another; the Senate and the Administration oppose it because it is not the comprehensive immigration bill they ultimately seek. It appears unlikely it will pass into law in its present form and there is speculation that Senate Majority Leader Harry Reid will not even bring the Senate version of the bill to the floor for a vote. 

For those wishing to follow the progress of the legislation, the bill number is HR 6429 (we incorrectly reported this earlier as HR 1629) and it can be tracked on the Thomas-Library of Congress website.