August 18, 2021

NAFCU expresses concerns with recent amendments to the PSPAs

mortgageNAFCU joined with a group of financial trade associations this week to request meetings with both the Treasury and the Federal Housing Finance Agency (FHFA) regarding the amendments to the Preferred Stock Purchase Agreements (PSPAs) for Fannie Mae and Freddie Mac (GSEs) and their impacts on the housing market.

"We are very concerned about the various product and program constraints previously agreed by the U.S. Department of the Treasury and the FHFA,” wrote the trade organizations in the letter. "We request that the Treasury and FHFA move quickly to amend the PSPAs to remove the product and program restrictions, including the cash window, to help communities in need to get access to affordable mortgage credit."

The groups argued that these constraints represent a fundamental change to the functioning of the secondary mortgage market and were designed to “shrink the GSEs’ business going forward.” Not only will the change negatively impact low-and moderate-income communities and communities of color, but they also set arbitrary and inflexible limits on the GSEs’ acquisitions and the operation of the cash window. Additionally, the group argues that the cap on the cash window may force other community mortgage lenders to limit their lending, which would hurt communities.

"It is critical than any future product and program changes, or restrictions that could limit access to affordable mortgage credit – especially for low- and moderate-income borrowers and communities of color – are done in a transparent manner,” concluded the group. “Supported by thorough analysis on the impacts to the housing market and the GSEs.”

Read the full letter. NAFCU will continue to work with the Treasury and the FHFA to advocate for policies that do not create additional burdens on credit unions and expand access to credit for those who are unbanked or underbanked.