Jan. 15, 2013 – NAFCU’s Dan Berger on Monday cautioned Federal Housing Finance Agency Acting Director Ed DeMarco that imposing mortgage loan buy-back policies would lead to a secondary mortgage market with fewer products and less competition from credit unions and other small lenders.
Berger, NAFCU’s executive vice president of government affairs, told DeMarco that any buy-back requirement would have a disproportionate impact on credit unions and other small lenders because they do not have the volume of loans or the capital needed to support a buy-back program. “This would be the case in a scenario where the [government-sponsored enterprises] adopt a policy requiring a buy-back provision for mortgages that are not ‘qualified mortgages,’ as well as a scenario where the GSEs adopt a more general requirement to agree to buy-back provisions,” Berger wrote in a letter sent Monday.
Such policies would also “reinforce a market that will potentially be predominantly made up of one or few products,” Berger wrote. On this point, he said the secondary market will potentially contract further to absorb the few number of mortgages that fall outside the CFPB’s “qualified mortgage” definition under its “ability-to-repay” rule.
In light of these concerns, NAFCU is requesting that the FHFA carefully considers the impact of these polices on credit unions and other small lenders, he said.