Participating in Rep. Maxine Waters’ (D-Calif.) housing finance market reform policy discussion session, CUNA made it clear that needed reforms must not hinder the ability of credit unions to meet their members’ housing finance needs in a member-friendly, cooperative way.
CUNA’s Chief Economist Bill Hampel represented CUNA at the session, which was the second in Waters’ housing finance reform series. Waters is the ranking Democrat of the House Financial Services Committee.
In his opening remarks, Hampel noted that credit unions have been engaged in mortgage lending since the 1970s, and originated $123 billion in first-lien mortgage loans in 2012. Those loans accounted for 6.5% of total market share.
“Credit unions are now significant players in residential real estate finance,” and “the fact that many loans will be held on credit unions’ books makes them prudent lenders,” he added.
“The fact that interest rate risk management often requires selling a significant portion of loans means an effective and accessible secondary market is vital to credit unions.” Equal access to the secondary market for lenders of all sizes is a must, he said. Hampel noted that the need to maintain space in the market for credit unions and other small financial institutions is referenced several times in the Housing Finance Reform and Taxpayer Protection Act of 2013, which was introduced in the Senate last week.
Most credit unions have plenty of excess funds to lend, but need a way to hedge interest rate risks and keep the loans on their books, Hampel said.
In his comments, he also outlined a series of principles that CUNA hopes a new housing market finance system will accommodate, including ensuring that even in troubled economic times, mortgage loans will continue to be made to qualified borrowers, emphasizing consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans, maintaining consumer access to products that provide predictable, affordable mortgage payments to qualified borrowers, such as the 30-year fixed rate mortgage, setting reasonable conforming loan size limits that adequately take into consideration variations in local real estate costs, and allowing credit unions to continue to service their member mortgages.
Overall, he said, the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.