September 06, 2018

NAFCU: Legislative solution on GSE reform must protect CUs

housingNoting the urgency of housing finance reform, NAFCU's Carrie Hunt reiterated to House Financial Services Committee leaders that any legislative solutions must guarantee credit unions unfettered access to the secondary mortgage market and ensure fair pricing based on loan quality, not quantity.

Hunt, NAFCU's executive vice president of government affairs and general counsel, wrote committee Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, D-Calif., ahead of today's hearing: "A Failure to Act: How a Decade without GSE Reform Has Once Again Put Taxpayers at Risk."  

The continued conservatorship of the government-sponsored enterprises (GSEs) is unsustainable in the long term and a legislative solution is needed as soon as possible, Hunt explained. Sharing again the association's housing finance reform principles with the committee leaders, she pointed out the importance of an explicit government guarantee on the payment of principal and interest on mortgage-backed securities.

"Such guarantee should be the backbone of any successful future housing finance system," she wrote. "Large banks should never again be permitted to capture the secondary market at the expense of small, community-based, member-owned financial institutions."

Hunt also noted support for several of the Federal Housing Finance Agency's (FHFA) ongoing initiatives, including its work on the Common Securitization Platform and Single Security as well as its continued activities with respect to credit risk transfer transactions. She urged the committee to consider the progress the FHFA has made with such initiatives and how they could fit into a future system.

"A strong, independent regulator is a key element of a reformed housing finance system," she added.