Newsroom

March 20, 2017

ECU Monitor: CUs note importance of secondary mortgage market

NAFCU's latest Economic & CU Monitor report on housing, sent to members yesterday, notes that a significant number of credit unions continue to participate in the secondary mortgage market, with more than half of respondents selling mortgage loans to Fannie Mae, Freddie Mac or both.

The Monitor also shows roughly one-third of survey respondents use credit union service organizations or Federal Home Loan Banks to sell mortgages to the secondary market, while 21.4 percent use private placement.

On average in 2016, the survey found, 22.5 percent of credit unions' mortgage loans were sold to the two government-sponsored enterprises. However, compared with pre-recession volumes, about 22 percent of respondents reported selling proportionally more mortgage loans to the GSEs prior to their conservatorship in 2008.

More than 68 percent of respondents are opposed to the elimination of the GSEs and the full privatization of housing finance without a government guarantee, the survey found. More than 62 percent favor preservation of an explicit government guarantee, particularly to protect the 30-year mortgage.

"Credit unions emphasized the need for an assurance of continued access to a reliable secondary market in order to serve the needs of their members, noting that the current system is working well," the Monitor noted.

Regarding housing regulation, survey respondents said they'd like to see more CFPB guidance on construction loans under the Truth in Lending Act/Real Estate Settlement Procedures Act integrated mortgage disclosure rule. Almost half of respondents also support changes to the ability-to-repay and the qualified mortgage standards.

The Federal Housing Finance Agency is current considering chattel loan pilot initiatives for the GSEs. In this month's survey, nearly half of respondents have no objections to the GSEs pursuing these initiatives, but the majority (52.9 percent) is still unsure about it.

This month's Monitor also noted that the credit union industry ended 2016 with a flourish, as estimated member growth topped 4 percent and loan growth exceeded 10 percent.

NAFCU members can now participate in next month's Economic & CU Monitor survey, which focuses on the Military Lending Act and the NCUA's regulatory priorities. Survey results are due April 3.