WASHINGTON (10/30/13)--The ability of small community-based institutions to provide consumers with competitive pricing and product offerings depends significantly on their ability to access the secondary mortgage market, Senate Banking Committee member Jon Tester (D-Mont.) said in a Tuesday hearing.
The Credit Union National Association has repeatedly noted that credit unions need equal and fair access to a secondary market for lenders of all sizes that will ensure affordable mortgage products for their members. CUNA has also said any mortgage market reforms that are made must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.
The Tuesday hearing, "Housing Finance Reform: Essentials of a Functioning Housing Finance System for Consumers," featured testimony from Center for Responsible Lending Senior Vice President Eric Stein, Genworth Financial President Rohit Gupta, National Association of Realtors President Gary Thomas, K & L Gates LLP Partner Laurence Platt, National Consumer Law Center Staff Attorney Alys Cohen and National Council of La Raza Vice President of Housing and Community Development Lautaro Diaz.
Stein agreed fully that having small lenders with direct access to the secondary market is very important. "If there are lenders willing to make those loans in [underserved areas], it's important that the secondary market be designed so that they have an outlet," he said. Gupta also noted it is very important for credit unions and other small lenders to have access to credit "across the board."
Responding to a question from Tester, Thomas noted rural communities depend on community based financial institutions. "The problem that we're getting to with such a tight credit box…is that you're only going to be left with large major lenders," he said. Such a situation would mean these large lenders could dictate what consumers pay, how they pay, and would make the loan market overly restrictive.
"We're getting into a position where only the best can get loans, and that's a big problem for all of us in sustaining a mortgage process that promotes home ownership throughout the country," Thomas added.
Tester during the hearing noted that the committee plans to hold weekly hearings on housing issues up until the Thanksgiving holiday, and could mark up housing reform legislation before the end of the year.
For more from the hearing, use the resource link.