April 28, 2020

NAFCU, Treasury discuss CU concerns

Treasury DepartmentMembers of NAFCU's Regulatory Affairs Team Monday discussed with the Treasury Department credit union concerns regarding a number of issues, including the Small Business Administration's (SBA) Paycheck Protection Program (PPP), capital relief, and forbearances.

In addition, NAFCU shared with Treasury the challenges credit unions are facing and how an exception to the payroll tax credit, which could create uncertainty as to whether federal credit unions are eligible for the credit, could further hinder their abilities to support members and employees during this time.

During the discussion, NAFCU shared credit unions' experiences with the PPP, which reopened Monday morning with $320 billion in additional funds available for lending. In a win for credit unions, $30 billion of the new funding is set aside for small lenders with less than $10 billion in assets, and another $30 billion set aside for lenders with assets between $10 billion and $50 billion.

NAFCU has been leading the way to ensure credit unions have all the resources needed to effectively participate in the program, aggressively lobbying Congress throughout negotiations and requesting that a portion of additional funds be set aside for credit unions to be able to meet their members' needs.

Last week, the association asked the SBA to provide more guidance related to loan forgiveness provisions of the program to clarify when credit unions can begin accepting applications for forgiveness.

NAFCU also mentioned credit union concerns related to capital and efforts to bolster liquidity during the pandemic. The association has consistently advocated for capital relief and has previously urged the NCUA to grant credit unions "additional capital flexibility to address the economic crisis" and provide parity with banks.

There are currently efforts underway in Congress to exempt coronavirus-related loans from the MBL cap and to increase or remove the MBL cap altogether in future relief packages. 

Additionally, NAFCU highlighted the need for guidance and relief for mortgage servicers. Under the CARES Act, borrowers experiencing financial hardship during the coronavirus crisis may request forbearance on single-family and multifamily loans sold to the GSEs, and in response mortgage servicers must provide a forbearance that allows borrowers to defer their mortgage payments up to 180 days with an option for an additional 180-day extension. However, the CARES act does not provide relief for mortgage servicers, such as credit unions, but the Federal Housing Finance Agency (FHFA) recently made an effort to do so.

The association has also shared with the FHFA concerns about the health of mortgage markets and the need to provide credit unions with additional relief, and urged the agency to take steps to support mortgage servicers. The association and agency also discussed the possibility of a liquidity facility. Treasury Department Secretary Steven Mnuchin last week indicated the Federal Reserve doesn't plan to create a facility to support nonbank mortgage servicers.

Although the Fed does not currently plan to create a mortgage servicer facility, Ginnie Mae earlier this month approved a private market servicer liquidity facility.

NAFCU will continue discussions with the Treasury Department to provide credit unions with additional guidance and relief amid the coronavirus pandemic.