Guaranteed secondary-market access for CUs backed
Oct. 30, 2013 – Several witnesses in a Senate Banking Committee hearing Tuesday aired support for housing finance reform that maintains government-guaranteed access to the secondary mortgage market for all – including credit unions.
The hearing, “Housing Finance Reform: Essentials of a Functioning Housing Finance System for Consumers,” featured testimony from representatives from the Center for Responsible Lending, Genworth Financial, Inc., K & L Gates LLP, the National Association of Realtors and the National Consumer Law Center.
Chairman Tim Johnson, D-S.D., opened by saying that lawmakers should try to make the market accessible to all responsible borrowers, and consider including provisions for multifamily homes and private-label securities in efforts at housing finance reform. Ranking Member Mike Crapo, R-Idaho, said the committee needs to focus on consumers and the importance of strong underwriting in creating a new system.
Eric Stein, senior vice president at the Center for Responsible Lending, testified that “the government guarantee must be explicit and paid for to prevent future taxpayer bailouts.”
“Housing finance reform should not require smaller lenders to go through their larger competitors,” he said, advocating direct access to a “cash window” for consumers.
Sen. Jon Tester, D-Mont., addressed the witnesses on the topic of community-based financial institutions, and Genworth Financial President Rohit Gupta agreed that it is very important for credit unions to have access to credit “across the board.”
Alys Cohen, representing the Consumer Law Center, told Tester, “It is our experience that the biggest problems are the biggest servicers.” She agreed that small mortgage servicers are vital to the market and advocated adding “additional servicing measures” to the legislation proposed by Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn. – the “Housing Finance Reform and Taxpayer Protection Act,” or S. 1217.
Several witnesses, including Stein, Gupta and Cohen, repeatedly emphasized the importance of considering several factors in determining whether a borrower is creditworthy, such as their employment records and credit history, instead of just their ability to afford a large down payment.
NAFCU continues to push for government-guaranteed access to the secondary mortgage market for credit unions in whatever form housing finance reform takes, as well as fair pricing based on the quality of loans instead of loan volume.