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CUNA: Stable, Reformed Secondary Mortgage Market Vital For CUs And Members
WASHINGTON (11/6/13)--Qualifying credit union members need to be able to buy or finance their homes in a stable mortgage market, Credit Union National Association Chief Economist Bill Hampel emphasized as he delivered credit union views and their members' needs in Tuesday Senate testimony on housing finance reform.

Click to view larger image CUNA Chief Economist Bill Hampel testifies before the Senate Banking Committee on Tuesday. (CUNA Photo)
Hampel was testifying before the Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market."

"As long as credit unions produce one or more eligible mortgages, they should be able to sell them to an issuer of government-backed securities, directly or through an aggregator, at market prices, for cash, without volume penalties, and with the option to retain servicing," Hampel told the Senate panel.

Hampel called on the U.S. Congress to ensure that credit unions "continue to be afforded the opportunity to provide mortgage servicing services to their members in a cost-effective and member-service oriented manner, in order to ensure a completely integrated mortgage experience for credit union members/borrowers."

Standardization at all steps in the mortgage process is important to credit unions, he emphasized.

One topic of Tuesday's hearing was the development of a mutual organization to protect access. In his testimony, Hampel shared some CUNA suggested improvements for this platform, including:
  • Making the mutual securitization platform accessible to lenders of all sizes;
  • Governing the mutual organization cooperatively, with a board elected by members; and
  • Granting the mutual platform a small but limited balance sheet to pool mortgages before sale and to hold some mortgages.
Credit unions may need additional investment authority in order to capitalize their share of the mutual, Hampel said. He also encouraged the committee to amend the federal credit union act to consider all loans made on 1 to 4 residential properties as residential loans, as is currently the case for banks.

He also suggested that Congress grant a one-year extension of compliance deadlines for pending Consumer Financial Protection Bureau mortgage rules. If such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards. A similar six-month delay should also be applied to legal liability provisions of mortgage regulations, Hampel said.

Written CUNA testimony also outlined some of the principles that should be followed as Congress revamps the housing finance system:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis;
  • The entities providing secondary market services must be subject to appropriate regulatory and supervisory oversight to ensure safety and soundness;
  • The new system must ensure mortgage loans will continue to be made to qualified borrowers even in troubled economic times;
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • The new system must include consumer access to products that provide for predictable, affordable mortgage payments to qualified borrowers; and
  • The new housing finance system should apply a reasonable conforming loan limit that adequately takes into consideration local real estate costs in higher cost areas.

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