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NAFCU encouraged the Federal Housing Finance Agency (FHFA) in a letter Friday to protect innovation and access within the housing finance system as it works to ensure the safety and soundness of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and the Federal Home Loan Bank (FHLB) System.

Writing the agency on its 2018-2022 strategic plan, NAFCU Regulatory Affairs Counsel Ann Kossachev said credit unions rely heavily on the GSEs and FHLBs in their work to provide their members with superior loan products. The government entities provide liquidity in the market and help hedge interest-rate risk through the secondary market.

The FHFA's strategic plan for 2018-2022 includes three goals:

• ensure safe and sound regulated entities;
• ensure liquidity, stability and access in housing finance; and
• manage the GSEs' ongoing conservatorships.

While the association generally supports the agency's goals, Kossachev said NAFCU would like to see additional efforts to "create a better housing finance market for credit unions and their members."

To help ensure the FHFA doesn't stifle innovation in or access to the housing finance system, Kossachev requested that the FHFA provide regular updates to the public regarding its risk management plans and procedures. Kossachev also asked the FHFA "to continue to closely monitor the GSEs purchasing activities so that pricing models focus on quality instead of volume."

Kossachev also encouraged the FHFA to create a pilot program that would allow the GSEs to purchase alternative mortgage loans, including single-family high LTV, shorter-term amortization mortgage loans, in order to reach underserved borrowers.

"Such a move would reduce a barrier for some credit unions seeking to enter the secondary market and allow them to provide more loans to their members who often times represent the underserved portion of the market that the FHFA strives to reach through its initiatives," Kossachev wrote.

As NAFCU's members remain concerned about credit unions' ability to participate in certain credit risk transfer transactions, Kossachev asked the FHFA to evaluate options that would allow credit unions to participate in various credit risk transfer transactions, such as aggregation through credit union service organizations or the FHLBs.

Read the full letter here.