Removing Barriers Blog

CUNA Files Letter to FHFA on the GSE Recapitalization Framework

This afternoon, CUNA filed a letter with FHFA regarding the capitalization framework for Fannie Mae and Freddie Mac (together, the GSEs).  Our comments reiterate our support for strong capital requirements that are in line with CUNA’s housing finance principles.  In keeping with those principles, we reiterated our prior comment that credit unions would benefit from greater transparency about the impact of their proposal on mortgage costs and pricing, particularly for low and moderate income individuals.  We also stated that too much reliance on the 2008 financial crisis as a measure of capital reserve needs may result in excessive capital retention, which could negatively impact the GSEs mission to provide liquidity to the primary mortgage market.

In our letter, we also offered a number of specific suggestions regarding technical risk-based calculation inputs and methods and for an extended years-long transition to prevent any negative impacts to the mortgage market that could arise due to these recapitalization efforts.  Because of the strong interest in these issues, FHFA is holding listening sessions in September, focusing on credit risk transfers (September 10, 2020 at 10AM Eastern) and affordable housing access (September 14, 2020 at 10AM Eastern).  Interested credit unions can register for these sessions via the link provided.