“This source of liquidity is critical to enabling credit unions to serve the mortgage needs of their 95 million member-owners across the country,” Dan Berger, NAFCU’s executive vice president of government affairs, said.
NAFCU also stressed the importance of implementing “safeguards” that prevent discrimination based on the type or size of an institution.
“To ensure this type of discrimination does not take place, NAFCU believes there needs to be a heavy focus on fair pricing that reflects loan quality as opposed to standards almost exclusively based on loan volume,” Berger said. “Loan quality and underwriting standards are the best way to ensure a healthy and efficient secondary market and a strong housing economy.”
NAFCU expressed concern regarding a recently announced policy from the Federal Housing Finance Agency that would limit future Fannie Mae and Freddie Mac acquisitions to loans that meet the CFPB’s definition of “qualified mortgage,” adding the new policy would “exclude currently-eligible loans from a large part of the secondary market.”
“We are concerned that the loss of a secondary market for non-qualified mortgage loans may only serve to exacerbate legal uncertainty and limit further the options of borrowers, especially those in underserved and rural communities,” Berger said. “It is precisely in such communities that borrowers need flexible options that the FHFA’s policy would limit.”
Additionally, NAFCU said that lenders already face compliance risks under CFPB regulations and would have less incentive to offer non-qualified mortgages under the new policy.
“The end result is that a number of otherwise financially healthy borrowers, who do not meet the stringent qualified mortgage standards for one reason or another, may be denied a mortgage, and the housing market and the secondary housing market will contract, further exasperating the issues facing all involved parties,” Berger said.