Sept. 7, 2012 – NAFCU shares the Federal Housing Finance Agency’s concerns about a small but growing number of local jurisdictions that intend to use the power of eminent domain to restructure mortgages and is ready to support the agency if it decides to take action.
In a Sept. 6 letter to the FHFA, NAFCU General Counsel and Vice President of Regulatory Affairs Carrie Hunt said the association agrees with the “significant concerns” identified by the agency about such activity in a recent Federal Register notice. FHFA said allowing eminent domain to restructure mortgages would impact the value of securities holdings and have a potentially “chilling effect” on the extension of credit to borrowers.
Hunt says the concerns are well founded. Such activity will “serve to undermine these investments and ultimately negatively impact credit availability to borrowers,” she said. Hunt also stressed the importance of access to a healthy secondary market for credit unions and cautioned that the use of eminent domain in this manner could “impede the recovery of the housing market.”
With that in mind, NAFCU would “strongly support appropriate action by the FHFA, as the conservator of Fannie Mae and Freddie Mac, to halt the impact of the eminent domain programs on mortgage lending,” she wrote.
NAFCU will continue to monitor developments closely.