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NAFCU advocated for more loan options, especially for low-income families, in its comment letter Tuesday on the Federal Housing Finance Agency's (FHFA) 2018–2020 housing goals for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

The association generally supports the proposed rule, but NAFCU Regulatory Affairs Counsel Ann Kossachev said focusing the single-family market on purchasing 30-year, fixed-rate mortgages is "too narrow" because it omits alternatives that would better assist very low- and low-income families.

To address this concern, Kossachev recommended GSEs offer loans with a zero or low down payment and shorter amortization terms to help first-time homebuyers purchase and build equity on a home.

One option is the Wealth Building Home Loan (WBHL), which is currently offered by more than 20 lenders and three credit unions. WBHL's key features include:

• a 15- or 20-year fully amortizing loan;
• either a fixed interest rate or a two-step rate structure;
• strong underwriting; and
• a zero or low down payment.

"When properly structured, such loans for single-family homes are less risky than a 30-year, fixed-rate loan," Kossachev said. "In fact, during the financial crisis, 15-year loans defaulted only a third as often as otherwise identical 30-year loans, and 20-year loans defaulted only half as often as identical 30-year loans."

NAFCU supports the FHFA's 2018–2020 housing goals, provided they encourage a pilot program for WBHLs or similar mortgage loans. It said doing so will inject much-needed liquidity into the mortgage industry and allow credit unions to help their members own a home.