Removing Barriers Blog

CUNA Sends Letter Prior to Banking Committee Hearing on Housing Finance System
Posted May 23, 2018 by CUNA Advocacy

Earlier today, the Senate Banking Committee held a hearing entitled, “Ten Years of Conservatorship: The Status of the Housing Finance System.”  Prior to the hearing, CUNA sent a letter to show support of an efficient, effective and fair secondary market with equal access to lenders of all sizes to Chairman Crapo and Ranking Member Brown.

Credit unions that elect to sell mortgages into the secondary market do so for a variety of reasons, but predominantly it is a tool to help them manage long term interest rate risk in order to continue to meet their members’ mortgage lending needs.  Particularly today, with long term interest rates at or near historic lows but expected to rise, access to a highly liquid secondary market with relatively low transaction costs is vital for the health of credit union mortgage lending.

Credit unions therefore have a deep interest in the structure of the housing finance system going forward, and CUNA supports an efficient, effective, and fair secondary market with equal access for lenders of all sizes, which adheres to the following principles:

  • A neutral third-party entity in the secondary market, independent of any firm that has any other role or business relationship in the mortgage origination and securitization process, to ensure that no market participant or class of participants enjoys an unfair advantage in the system. 
  • Equal access for lenders of all sizes on an equitable basis. Guarantee fees or other fees/premiums should not have any relationship to lender volume; 
  • Strong oversight and supervision for the entities providing secondary market services to ensure safety and soundness by ensuring accountability, effective corporate governance and preventing future fraud; 
  • Durability to ensure mortgage loans will continue to be made to qualified borrowers even in troubled economic times 
  • An emphasis on financial education and counseling to ensure that borrowers receive appropriate mortgage loans; 
  • Access to products with predictable and affordable payments to qualified borrowers; 
  • Application of reasonable conforming loan limits that adequately take into consideration local real estate prices in higher cost areas. 
  • Support for affordable housing should be a function separate from the responsibilities of the secondary market entities; 
  • Credit unions should continue to be afforded the opportunity to retain or sell the right to service their members’ mortgages, at the sole discretion of the credit union; and 
  • A reasonable and orderly transition from the current system to any new system, to prevent significant disruption to the housing market.  

On behalf of America’s credit unions and their 110 million members, CUNA will continue to advocate for credit unions’ principles to be included in any potential reform of our nation’s housing finance system.