April 28, 2014

NAFCU: Concerns about GSE reform remain

April 29, 2014 – NAFCU President and CEO Dan Berger wrote the leaders of the Senate Banking Committee to urge further consideration for credit unions in terms of ensuring "equal and competitive access" to the secondary mortgage market in a new housing finance system.

Over the weekend, NAFCU lobbyists reviewed proposed changes to the draft housing finance reform package proposed by Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, in advance of a committee mark-up of the legislation scheduled for today.

"NAFCU is pleased and appreciative that the draft manager's amendment addresses some of the issues and concerns we have shared with the Committee," Berger wrote. "Even with these proposed amendments, NAFCU still has serious concerns about overall costs and workability of the proposed new system. Furthermore, we would also continue to urge that the Committee address the outstanding concerns and recommendations from our April 11, 2014, joint letter with the Credit Union National Association (CUNA) and Independent Community Bankers of America (ICBA).

"Housing finance reform must ensure equal and competitive access for credit unions while avoiding further concentration of the primary and secondary mortgage markets to the largest of lenders and Wall Street firms," he continued. "We continue to believe it is critical that any increased costs associated with establishing a new housing finance system be minimal so as to not increase the cost of borrowing for consumers."
The manager's amendment would, among other things:

  • further clarify NCUA's role under the new system for providing input as the functional regulator of credit unions;
  • clarify that credit unions could invest in new securities offered through the new Federal Mortgage Insurance Corporation as they can do now through Fannie Mae and Freddie Mac;
  • prohibit any affiliation between guarantors and originators of single-family mortgages;
  • seek to ease access to the mutual for small institutions, including through establishment of a streamlined process for lenders already approved by Fannie and Freddie.

NAFCU has met with White House and administration officials several times in recent weeks to discuss housing finance reform. It is pressing for equal, competitive access to the secondary mortgage market for credit unions and has expressed concerns about the cost of the proposed reforms and uncertainty with moving toward a new system. It has also made several specific recommendations with other financial trade organizations to improve the discussion draft.