Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
CUNA CUs must have access to secondary mortgage market
WASHINGTON (11/4/11)--Rep. Scott Garrett's (R-N.J.) Private Mortgage Market Investment Act, which was the subject of a Thursday hearing, could create a secondary mortgage market made up exclusively of the largest banks in the country, and could result in credit unions being excluded from that market, the Credit Union National Association (CUNA) has warned.

Thursday's hearing took place before the House Financial Services subcommittee on capital markets and government sponsored enterprises. Garrett's bill would require the Federal Housing Finance Agency (FHFA) to develop underwriting standards and securitization agreements and abolish the risk retention standards set forth by the Dodd-Frank Act. The legislation would also provide new disclosures for mortgage investors and securities purchasers.

FHFA Acting Director Edward DeMarco testified during the hearing, saying that "private capital markets can and should reclaim a prominent portion in providing housing finance." Garrett's proposal "broadens the discussion of how we might do that," he said.

DeMarco said "there seems to be relatively broad agreement that the government sponsored enterprise model of the past, where private sector companies were provided certain benefits and charged with achieving certain public policy goals, did not work." However, he added, there will likely "always be some portion of the housing or mortgage market that will be assisted by government programs, either through direct funding or through guarantees."

He added that any mortgage market must be able to preserve credit availability in times of stress and preserve liquidity in the market and the financial system. DeMarco suggested that governmental bodies could serve as backstops to guard against credit availability or liquidity issues. "These are just some of the issues that will have to be thought through as the process moves forward on building out this framework," he added.

The Obama administration is still considering a range of options for mortgage market reform, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Administration officials have said that each of these proposals would shrink the government's role in the mortgage market.

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said it is possible that Garrett's bill may be marked up before the end of this year, but its prospects are unclear after that.  While a number of hearings have been held in the Senate Banking Committee, it is not clear that the Senate will take up comprehensive housing finance reform legislation before the end of the Congress.
Other Resources

RSS print
News Now LiveWire
Stay tuned for coverage of @CUNA's BSA conference which starts Sunday. #CUNABSA #CUNACompliance
19 hours ago
Today's the last day to complete @CUNA's Home Depot data breach survey http://t.co/UcB8G9bVXe #StoptheDataBreaches
20 hours ago
Brenda Davis of Cross Roads Ministries will walk through 83 communities during the Ending Hunger Walking tour. (2 of 2)
21 hours ago
The Ending Hunger Walking tour, coordinated by the Maine CU League, kicked off at Old Maine CU in Augusta today. (1 of 2)
21 hours ago
Darwin Brokke of Citizens Community CU represented the #CU Association of Dakotas at a housing summit hosted by @SenatorHeitkamp
22 hours ago