October 24, 2017

NAFCU rep Stafford shares CU views on housing finance in hearing today

NAFCU witness Rick Stafford, president and CEO of Tower Federal Credit Union (Laurel, Md.), today will share during a House Financial Services subcommittee hearing credit unions' views on housing finance reform and the importance of maintaining secondary market access for the industry.

Stafford will share with the committee NAFCU's core principles for housing finance reform, which the association believes should be included in any reform effort to guarantee the continued safety and soundness of the credit union industry. His testimony will cover the longstanding and vital relationship between credit unions and the government-sponsored enterprises (GSEs) and how important it is for credit unions to continue to have unfettered access to the secondary market with fair pricing based on loan quality, instead of volume.

In prepared testimony, Stafford will discuss his own credit union's relationship with Fannie Mae, to which his credit union currently sells approximately 80 percent of its loans. "We sell our loans directly to Fannie Mae because they offer competitive pricing for affordable lending to our members, as well as diverse mortgage products and the ability to maintain a servicing relationship with our members," his testimony states. "To us, these are more than just loans. Each one represents a family in a home, and each mortgage application is a new opportunity to help make a family's dream of home-ownership come true."

Stafford will also discuss credit unions' unique role in the housing market. His testimony includes graphs that highlight how credit union real estate loan growth has outpaced that of banks since the economic downturn, and show the credit union industry has fared better with respect to real estate delinquencies and real estate charge-offs. He will note NAFCU's concern that any costs of a reformed system do not become burdens on small lenders such as credit unions.

Stafford will testify that the GSEs should be allowed to recapitalize to ensure they are in a safe and sound condition and that large institutions should not be given control over the housing market as it would have negative consequences for smaller institutions.

Also regarding a future housing finance system, Stafford will detail key parts of the current system that should be retained, including access to technology provided by the GSEs that help small lenders. He will also note that the "function of the cash window at the GSEs as a single loan execution process and best-efforts loan commitments are also vital to credit unions moving forward."

He will also touch on the importance of credit unions retaining servicing rights on the loan they make and underwriting criteria that should be established in a new system. Stafford will highlight specific ways Congress can provide the credit union industry with regulatory relief in a future housing finance system, such as changes to the CFPB's qualified mortgage rule and through various requirements within the TILA-RESPA integrated mortgage disclosure rule (TRID).

Stafford is testifying on behalf of NAFCU today alongside representatives from the Securities Industry and Financial Markets Association, American Bankers Association, Independent Community Bankers of America and Center for Responsible Lending. Today's hearing, "Sustainable Housing Finance: Private Sector Perspectives on Housing Finance Reform," held by the Subcommittee on Housing and Insurance, will begin at 10 a.m. Eastern.