September 11, 2019

Next steps for housing finance reform focus of Senate hearing

The Senate Banking Committee's hearing Tuesday focused on housing finance reform efforts revealed a commitment to ensuring credit unions' access to the secondary mortgage market. NAFCU has consistently shared with lawmakers, the administration and other stakeholders the importance of preserving this access. 

“Congress, as well as the Administration, must work hand-in-hand to protect taxpayers and the safety and soundness of the housing finance system,” said NAFCU President and CEO Dan Berger. “First and foremost, a legislative solution is necessary and crucial to ensuring credit unions receive guaranteed access to the secondary mortgage market and fair pricing for their paper, and we appreciate the Senate Banking Committee’s commitment to these key issues. Also, the committee’s focus on allowing Fannie Mae and Freddie Mac to rebuild their private capital reserves is a positive development as private capital can be used to shield American taxpayers from risk, place the GSEs on solid financial footing, and help stabilize them for the long-term.” 

Treasury Secretary Steven Mnuchin, Department of Housing and Urban Development (HUD) Secretary Ben Carson, and Federal Housing Finance Agency Director Mark Calabria provided testimony to the committee on the issue. The Trump administration last week released plans from Treasury and HUD to reform the housing finance system.

During opening remarks, Senate Banking Committee Chairman Mike Crapo, R-Idaho, stressed the importance of a level playing field and Ranking Member Sherrod Brown, D-Ohio, said reforms need to focus on increasing services for underserved borrowers. 

Mnuchin provided the committee with a detailed overview of the Treasury's plan and said the department prefers to work with Congress to enact comprehensive housing finance reform. He also discussed the issue of providing a government backing for 30-year, fixed-rate mortgages.

When asked how community banks and credit unions would be impacted by the proposed reforms Mnuchin said Treasury "will absolutely make sure they did not fare worse. We want them to be treated fairly; that is a very big part of any future plan.” Carson added that these institutions are key to housing finance reform, noting "their ability particularly to provide education to people about housing financial management is essential.” Calabria also said FHFA would work to eliminate volume discounts for large lenders to ensure equal pricing.

Ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler reiterated the association's housing finance reform principles. Calabria and Brown are set to address attendees today at NAFCU's Congressional Caucus.