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May 23, 2019

NAFCU to Ginnie Mae: Study impact of VA loan changes

Mortgage SignNAFCU's Ann Kossachev urged Ginnie Mae to "to study credit union lending patterns and establish limits that do not hurt [Department of Veteran Affairs (VA)] lending programs, especially in underserved and rural communities where credit unions may be the only available financial institution."

Kossachev, NAFCU's director of regulatory affairs, offered the feedback in response to a request for input on potential changes to its Ginnie Mae II Multi-Issuer Program that would remove cash out refinance loans made through the VA.

In the letter, Kossachev reiterated that several credit unions are Ginnie Mae issuers and provide a variety of VA loans but follow strong underwriting standards and do not engage in predatory lending practices. She shared NAFCU's recommendation for the agency to wait for the VA to complete its own evaluation of VA cash-out refinances to minimize any adverse effects on veterans looking to refinance.

"Ginnie Mae should examine the impact of its own recent actions as well as those by Congress and the VA over the next year before deciding whether to exclude VA cash-out refinances from the GII MIP," wrote Kossachev. "If Ginnie Mae does choose to take action before that point, imposing a de minimis standard to restrict inclusion in the GII MIP would likely have the fewest negative impacts on the credit union industry, but could still hurt credit unions and their veteran members."

Kossachev also pointed to several changes that have impacted VA lending and pooling requirements in recent years, including Ginnie Mae's All Participants Memorandum 16-04 – which established a six-month seasoning requirement – and the VA's recent interim final rule to establish new requirements on cash-out refinances.

Additionally Kossachev shares NAFCU and its member credit unions' objection to predatory lending practices and support of Ginnie Mae working with the VA to curb "churning" by lenders that prey on our nation's veterans, while urging the agency to provide more opportunities for stakeholder feedback.

Read the full letter here.

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