February 21, 2012
Mr. Edward J. DeMarco
Federal Housing Finance Agency
1700 G Street, NW, 4th Floor
Washington, D.C. 20552
RE: FHFA’s Strategic Plan for Enterprise Conservatorships
Dear Mr. DeMarco:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions (FCUs), I am writing to you regarding the Federal Housing Finance Agency (FHFA)’s strategic plan for enterprise conservatorship.
First and foremost, NAFCU would like to thank the FHFA for its continued work to help stabilize the nation’s mortgage market. Since the beginning of the housing market crisis, NAFCU has been in regular contact with the FHFA to express credit unions’ concerns and interests.
The strategic plan sets forth three goals for the next phase of FHFA’s conservatorship of Fannie Mae and Freddie Mac (GSEs). The goals, in general, address (1) building a new infrastructure; (2) contracting GSE operations; and (3) maintaining foreclosure prevention efforts and credit availability.
For NAFCU, the FHFA strategic plan raises more questions than it answers in the ongoing debate of GSE reform. Whether a government guarantee will be part of the future of any reform plan is a key issue for our members, and one FHFA has specifically not answered in its plan. Further, the impact of a single securitization platform, the role of pricing, and the degree of private market control in secondary market are all areas where the specific details determine whether the outcome will be positive or negative for our members.
NAFCU strongly supports a government guarantee in the secondary housing market. NAFCU also supports a viable secondary market where credit unions have equitable access. As such, we are concerned that the plan appears to move forward toward privatization and does not mention the concerns of small lenders such as credit unions.
NAFCU is also concerned about some aspects of the FHFA’s second goal. In particular, we have concerns with the strategy to increase guarantee fee pricing. As the FHFA knows, increased fees disproportionately affects small lenders such as credit unions as they lack the economies of scale enjoyed by the nation’s largest lenders. Thus, increasing the guarantee fees would likely increase the barrier to entry for credit unions.
We look forward to a continued debate on these issues and appreciate that FHFA has acknowledged the necessity to keep Fannie Mae and Freddie Mac viable until an appropriate transition is in place.
NAFCU appreciates the opportunity to provide our initial feedback to the FHFA’s plan. Should you have any questions or would like to discuss these issues further, please contact me at firstname.lastname@example.org or by telephone at (703) 842-2215 or Tessema Tefferi, NAFCU’s Regulatory Affairs Counsel at email@example.com or (703) 842-2268.
Fred R. Becker, Jr.
President and CEO