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May 18, 2017

FHFA's Watt reiterates true housing finance reform depends on Congress

Federal Housing Finance Agency Director Mel Watt on Thursday reiterated that while the agency has been engaged in reforms of government-sponsored enterprises Fannie Mae and Freddie Mac, only Congress can accomplish real housing finance reform.

Watt delivered his comments during the American Mortgage Conference in North Carolina. He gave similar remarks last week before the Senate Banking Committee, saying that Congress needs to make legislative reforms to the GSEs because their "conservatorships are not sustainable."

Watt acknowledged yesterday that the FHFA has made efforts to level the playing field for lenders of all sizes. He said the GSEs have eliminated volume-based discounts on guarantee fees and the GSEs' credit risk transfer transactions will also not provide volume-based guarantee fee concessions that benefit larger entities over smaller ones.

"These are among the requests NAFCU has made of the FHFA, and we are pleased to see them adopted as principles in the agency's GSE reform efforts," said NAFCU Regulatory Affairs Counsel Ann Kossachev.

NAFCU's priority in any reforms of the housing finance system remains to ensure credit unions access to the secondary mortgage market. The association has also urged that Congress put into place safeguards that will prevent discrimination based on institution type or asset size.

In his remarks Thursday, Watt also discussed the GSEs' credit risk transfer programs and the agency's efforts to improve access to credit. NAFCU has noted concerns about credit unions' ability to participate in front-end credit risk transactions and warned against rushing the overall process, which could hurt credit unions' access to the secondary mortgage market.