Housing Finance Reforms NAFCU

The NAFCU (The National Association of Federally Insured Credit Union) has proposed 10 core principals for housing finance reform.  In a statement made by the trade organization; “In the years since the Great Recession, it has become increasingly clear that the status quo for our housing finance system is an unsustainable long term option ,” said the association. “ It is essential that we now devote time to establishing workable principles through which to guide potential housing finance reform efforts.”

The main focus seems to be greater access to secondary markets for it’s members, an explicit government guarantee for MBS market, and that the GSE’s should be self funded.  Credit unions provide a valuable service to the communities they’re located in.  Loan rates for credit cards and cars along mortgage rates are competitive and they generally provide a more personalized service to the average customer than the large regional and nationwide banks.

Here are NAFCU’s principles per the groups paper for housing finance reform.

❯ A healthy, sustainable and viable secondary mortgage market must be maintained.
Credit unions must have unfettered, legislatively-guaranteed access to the secondary
mortgage market. In order to achieve a healthy, sustainable and viable secondary
market, there must be vibrant competition among market participants in every aspect
of the secondary market. Market participants should include, at a minimum, at least
one GSE, the Federal Home Loan Banks (FHLBs), Ginnie Mae, and private entities.

❯ The U.S. government should issue an explicit government guarantee on the payment
of principal and interest on MBS.
The explicit guarantee will provide certainty to the market, especially for investors who will
need to be enticed to invest in MBS, and facilitate the flow of liquidity through the market.

❯ The GSEs should be self-funded, without any dedicated government appropriations.
Although the U.S. government should be involved in the secondary mortgage market,
the GSEs should not be government-funded mortgage programs. The GSEs’ fees
should provide the revenue necessary for sustained independent operation. Those
fee structures should, in addition to size and volume, place increased emphasis on
the quality of loans. Risk-based pricing for loan purchases should reflect that quality
difference. Credit union loans provide the high quality necessary to improve the
salability of the GSEs’ securities.

To read the full list of principals please visit the NAFCU website.

The paper states:  “These general positions underlie the following specific GSE reform principles that NAFCU believes must be a central part of any legislative reform effort. The ultimate goal is to create a thriving and sustainable market for mortgage-backed securities (MBS) that will provide equal access to lenders of all sizes and will not require another taxpayer bailout,”.