July 20, 2017

Purvis to Senate Banking: Small lenders must retain access to secondary housing market

Preserving equitable pricing and retaining access to the secondary mortgage market for small lenders must be incorporated into any new housing finance system, NAFCU witness Chuck Purvis, president and CEO of Coastal Federal Credit Union in Raleigh, N.C., told the Senate Banking Committee Thursday.

Purvis shared with the committee the tenets NAFCU recommends be included in any reform effort to help ensure the continued safety and soundness of the credit union industry.

Committee Chairman Mike Crapo, R-Idaho, discussed the principles that he believes should be carried over into a new housing finance system. His list is closely aligned with NAFCU's core principles for housing finance reform, including, among other things, a level playing field to ensure small lenders have secondary mortgage access. Purvis said he agreed with Crapo's recommendations.

Ranking Member Sherrod Brown, D-Ohio, noted that the government-sponsored enterprises used volume discounts in the past, which often favored larger lenders. He asked how important equitable pricing was in the housing finance system. Purvis said pricing needs to be equitable.

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Coastal FCU's Chuck Purvis (right) met with Sen. Thom Tillis, R-N.C., ahead of Thursday's hearing. (Dietsch photo)

Purvis also spent some time talking about his credit union's efforts related to affordable housing. He touted the credit union's first-time homebuyer program, which helps members who want to buy a home but don't have a down payment. He also noted the 2 percent mortgage program his credit union offers for low-income families. Sen. Thom Tillis, R-N.C., asked how Congress can help with these efforts. Purvis said the operational relationship between credit unions and Fannie Mac to the securities market works very well and should not be lost or broken as Congress looks to reform the system.

Sen. Bob Menendez, D-N.J. opened a discussion about the function of the cash window at the GSEs; he asked how critical it was for lenders using that program to still maintain loan servicing rights. Purvis said for credit unions, it is all about the relationship and being there for the borrower throughout the entire process.

Sen. Tim Scott, R-S.C., asked about using different credit scoring models to enable more people to be eligible for a loan. Purvis noted that the FICO scoring models used are decades old and remain outdated despite some changes. He said new data sources, such as cell phone and utility payments, should be accounted for when assessing someone's creditworthiness.

Prior to Thursday's hearing, Purvis and NAFCU staff met with both Tillis and Sen. Richard Burr, R-N.C., who chairs the Senate Select Committee on Intelligence.