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NAFCU and several other organizations supporting the financial services and housing industries met with Federal Housing Finance Agency (FHFA) Director Dr. Mark Calabria Wednesday to discuss recent amendments to the government-sponsored enterprises' (GSEs) Preferred Stock Purchase Agreements (PSPAs). The group also discussed housing finance reform and recent efforts to move the GSEs out of conservatorship.

The Treasury and FHFA announced the PSPA amendments in January, which allow the GSEs to retain earnings until they meet capital rule requirements. The announcement also indicated that Treasury will permit the GSEs to raise private capital and exit conservatorship once certain conditions are met, in addition to restructuring the department's investment in each enterprise. The PSPAs also establish limits on the purchase of certain types of mortgages.

The association joined with other trades earlier this month to recommend revisions to the PSPA amendments, including:

• raising the limit on use of the cash window to limit the impact on smaller lenders;
• removing new mortgage product covenants, which place purchase limits on certain single-family loans and will exacerbate affordability and access challenges for creditworthy borrowers who may have higher loan-to-value ratios and debt-to-income ratios;
• removing restrictions on loan features and volumes that could create constraints in the market; and
• providing an impact analysis of the PSPA amendments and allowing for more transparency by delaying the implementation dates of the changes and providing stakeholders and the public with additional data and explanation.

Of note, the FHFA yesterday announced a new refinance option for low-income mortgage borrowers, though the PSPA amendments could restrict the GSEs' ability to acquire these loans.

NAFCU has also raised concerns about the amendments' impact on the GSE patch under the qualified mortgage (QM) rule compliance extension – while compliance with the QM rule was delayed to October 22 this week, GSEs can only acquire GSE patch loans until July 1, 2021 – and costs related to compliance and fees.

In addition, the FHFA last year finalized a rule to establish capital requirements for Fannie Mae and Freddie Mac, marking an additional step toward removing the GSEs from conservatorship. NAFCU has urged the agency to "adopt a realistic capital framework for the GSEs to begin moving toward exiting conservatorship," as well as to work with Congress to codify certain protections to ensure credit unions maintain unfettered access to the secondary mortgage market.

NAFCU has also flagged concerns around the FHFA's proposed minimum liquidity and funding requirements for the GSEs, noting that they could affect the cost and availability of mortgage loans for the most vulnerable consumers.

NAFCU will continue to advocate on behalf of the credit union industry's and its members' best interests in the housing finance system.