WASHINGTON (6/20/13)--Freddie Mac's decision to impose fees on mortgage sellers and servicers that do not meet minimum activity thresholds "could hamper the ability of credit unions to serve their members in the mortgage marketplace," Credit Union National Association President/CEO Bill Cheney wrote in a letter to Freddie Mac CEO Donald Layton.
The government-sponsored enterprise (GSE) on May 15 announced that effective Jan. 1, 2014, sellers and servicers that do not meet minimum activity thresholds for the prior calendar year will be assessed a fee of $7,500 for low activity. Sellers and servicers must sell loans with an aggregate unpaid principal balance of $5 million, or service or act as servicing agent for loans with an aggregate unpaid principal balance of $25 million in the prior calendar year to avoid the fees.
Cheney urged the GSE to eliminate the minimum activity threshold fee or to exempt credit unions from the fee.
"The basis for the fee is questionable as applied to credit unions," he explained. Fannie says the fee is meant to support risk management efforts and offset other costs. However, Cheney wrote, "credit unions have not generated widespread losses to Freddie Mac, and should not be asked to pay a fee ostensibly for 'risk management.'
"The losses which Freddie Mac has experienced in the past five years were not caused by credit unions, and credit unions should not be asked to bear the burden of others," he said.
The CUNA CEO wrote the fees would impact small institutions that can afford them the least, especially impacting credit unions in rural and underserved areas where annual real estate sales activity and housing prices are not high enough to generate the dollar figures that meet Freddie Mac's thresholds.
Overall, he said, the fees could "contribute to some credit unions leaving the mortgage business altogether, restricting access to credit to millions of Americans."
For the full letter, use the resource link.
Freddie Mac was the topic of another CUNA letter sent this week. In that letter, Cheney told Federal Housing Finance Agency Acting Director Ed DeMarco that his agency's decision to prohibit Fannie Mae and Freddie Mac from purchasing mortgages that do not meet the definition of qualified mortgages could prevent credit unions from working with their members to customize financial products that meet their individual needs. (For more, see June 19 News Now story: CUNA Warns FHFA QM Proposal Could Harm Credit Access.)