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NAFCU witness Chuck Purvis, president and CEO of Coastal Federal Credit Union in Raleigh, N.C., today will emphasize during a Senate Banking Committee hearing the importance of ensuring that any housing finance reform plan preserve credit unions unfettered access to the secondary market, and under fair pricing conditions.

Purvis will share with the committee NAFCU's core principles for housing finance reform, which it believes should be included in any reform effort to guarantee the continued safety and soundness of the credit union industry.

Along with maintaining a sustainable secondary mortgage market, among other tenets, NAFCU's core principles for housing finance reform also include:

• an explicit government guarantee on the payment of principal and interest on mortgage-backed securities;
• self-funded government-sponsored enterprises without any dedicated government appropriations;
• the creation of a Federal Housing Finance Agency board of advisors;
• allowance for the GSEs to rebuild their capital buffers;
• preservation of the Federal Home Loan Banks as a central part of the mortgage market; and
• expansion of credit risk transactions and retention of the Common Securitization Platform and the Single Security.

Purvis will also discuss credit unions' unique role in the housing market. His testimony includes graphs that highlight how credit union real estate loan growth has outpaced that of banks since the economic downturn; and show the credit union industry has fared better with respect to real estate delinquencies and real estate charge-offs. He will note NAFCUs concern that any costs of a reformed system do not become burdens on small lenders such as credit unions.

He will further explain why credit unions must have guaranteed access to secondary market sources, including Fannie Mae, Freddie Mac, Ginnie Mae and the FHLBs. In 2015, his testimony notes, a total of 60 percent of credit unions' first mortgages sold to the secondary market were sold to the GSEs.

In prepared testimony, Purvis notes that Coastal Federal Credit Union has been offering mortgage loans for the past 40 years, and until 2008, the majority of those mortgages were held in portfolio. "As demand grew and long term interest rate risk came into play, we began to work with Fannie Mae to sell many of our loans into the secondary market," he notes. "From 2008 to 2009, we experienced a 300% increase in the value of loans sold to Fannie Mae."

Purvis will also detail key parts of the current housing finance system that should be retained, including access to technology provided by the GSEs that help small lenders. He will also stress that "the function of the cash window at the GSEs as a single loan execution process is also vital to credit unions moving forward."

Purvis will also highlight specific ways Congress can provide the credit union industry with regulatory relief in a future housing finance system, such as changes to the CFPB's qualified mortgage rule and through various requirements within the Real Estate Settlement Procedures Act and Truth in Lending Act.

Today's hearing begins at 10 a.m. Eastern.