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NAFCU Senior Vice President of Government Affairs Greg Mesack Tuesday wrote to the House Financial Services Committee regarding several housing finance topics ahead of its hearing today to provide oversight of the Federal Housing Finance Agency (FHFA).

Capital requirements and guarantees
NAFCU has been supportive of the FHFA’s efforts to allow government-sponsored entities (GSEs) to help rebuild capital and has advocated for strong liquidity and funding requirements. However, the association does not support the cost of increased guarantee fees as a trade-off, which imposes additional costs on borrowers. NAFCU asks the Committee to urge the FHFA to be transparent in communicating its expectations around guarantee fees.

Climate-related risks
NAFCU shared support for the FHFA’s goals of promoting safe and sound operations at the GSEs and Federal Home Loan Banks noting that credit unions rely on access to the secondary mortgage market for the liquidity needed to make member loans. The association also shared support for the FHFA’s incorporation of climate change into the GSEs’ governance stating its appreciation for the agency’s focus on “improving climate data collection, analysis, and reporting, as well as evaluating the risks and effects of climate change on the housing finance system.”

NAFCU also encouraged the FHFA’s continued cross-agency collaboration with the NCUA, Financial Stability Oversight Council, and other agencies on analyzing climate change risks. The association also called for the FHFA to adopt a risk-based approach framework for regulating and supervising the GSEs when it comes to climate risks. 

Appraisals 
NAFCU recommended that the FHFA promote efficiency and cost savings in the mortgage process by streamlining and modernizing the appraisal process. The Biden Administration in March announced its action plan aimed at reducing home appraisal bias, as part of a larger effort to address the sprawling racial wealth gap. NAFCU has been supportive of the Administration’s efforts to eliminate bias in the home appraisal process and offered input on this topic to lawmakers. 

Affordable housing and Community Development Financial Institutions (CDFIs)
NAFCU shared support for the FHFA to establish a Wealth Building Home Loan pilot program that would provide a safer path to homeownership due to borrowers having the ability to generate equity at a faster rate. The association also urged the FHFA to consider pilot programs for low- or zero-down payment mortgage loans that help borrowers build wealth. 

NAFCU previously encouraged the FHFA to create a separate pilot program to allow GSEs to buy non-conforming loans from CDFIs, which serve the communities that the programs are created to help. 

Of note, GSEs Fannie Mae and Freddie Mac announced last month their Equitable Housing Finance Plans that identify and address barriers to sustainable housing opportunities and break down goals and action plans to advance equity in housing finance for the next three years, which includes NAFCU-requested increases in capital for CDFIs and minority depository institutions.

Read the full letter here. The association remains engaged with the FHFA to ensure credit unions are able to provide exemplary mortgage lending services to consumers.