Removing Barriers Blog

Credit union priorities sent to Senate Banking Committee prior to hearing on Housing Finance Reform
Posted September 10, 2019 by CUNA Advocacy

Last week, the Administration released its long-awaited proposal for housing finance reform—outlining Treasury’s goal of returning Fannie-Mae and Freddie Mac to privately held companies and urging Congress to pass legislation that would expand the number of secondary market participants with access to an explicit government guarantee. 

This week, the Senate Banking Committee held a hearing to discuss housing finance reform.  Prior to the hearing, CUNA wrote to Chairman Crapo and Ranking Member Brown outlining what must be present in a future system to ensure a strong and sustainable secondary market.

The letter notes that the future secondary mortgage market must “build upon and strengthen the existing partnerships between credit unions, guarantors, and Federal Home Loan Banks in ensuring access to responsible and affordable mortgage credit for millions of credit union members.”

CUNA believes, as Congress and the administration work to reform the current housing finance system, the following priorities must be prioritized:

  • Equal access to lenders of all sizes on an equitable basis;
  • Affordability that incudes recognition of the fact that smaller lenders, such as credit unions, often meet mortgage needs that banks are unwilling or unable to address in rural and working-class communities that require greater flexibility in underwriting requirements and weigh against mandatory minimum down payments;
  • A reasonable and orderly transition to a new housing finance system. Accordingly, efforts to transfer guarantee oversight authority to entities, such as Ginnie Mae, must honestly assess and plan for potential frustrations if not acknowledged, addressed, and corrected well in advance of any transition;
  • Strong oversight and supervision to ensure the safety and soundness of secondary market entities;
  • Durability, by including an explicit federally insured or guaranteed component to ensure that, even in troubled economic times, the secondary mortgage market continues to exist; and
  • Preserving what works, such as cost-effective and member-oriented credit union mortgage servicing options, emphasizing consumer education and home-purchase counseling, and applying reasonable conforming loan limits that adequately consider local real estate expenses in higher cost areas.

On behalf of America’s credit union and their 115 million members, CUNA is committed to working with both Congress and the Administration to refine and build upon these proposals to ensure that they accomplish a strong and sustainable secondary mortgage market for the future.