(December 19, 2013) --
Mr. Edward J. DeMarco
Acting Director
Federal Housing Finance Agency
Constitution Center
400 7th Street, SW
Washington, D.C. 20024
Dear Acting Director DeMarco:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only national trade association exclusively representing the interests of our nation’s federal credit unions, I am writing to you regarding the recent announcement by Fannie Mae and Freddie Mac concerning a 10 basis points increase in guarantee fees and implementing changes to loan-level price adjustments (LLPAs) for single-family loans with original maturities greater than 15 years.
NAFCU strongly opposes these changes and urges the Federal Housing Finance Agency (FHFA) to reverse course.
The changes follow a directive by the FHFA to Fannie Mae and Freddie Mac and are a part of the FHFA’s implementation of its Strategic Plan for Enterprise Conservatorship. Pursuant to the changes, ongoing single-family guarantee fees will increase by 10 basis points for all maturities. In addition, a very large portion of borrowers will be required to pay significantly larger upfront fees due to the changes in the LLPAs. FHFA reasons that these changes will allow private investors to compete.
NAFCU does not believe that these actions are appropriate because the cost of borrowing will greatly increase and lending will inevitably slow down. While we recognize that the housing market is recovering, it is important that the FHFA considers that there are many indicators showing a slowdown in the recovery. For example, applications for purchase transactions have decreased by 10 percent from the 3rd quarter in 2012 to the same time this year. During the same period, lenders have seen over 50 percent fewer mortgage applications, including refinancings. Further, and crucially, many lenders, including a vast majority of NAFCU member credit unions, do not plan to extend mortgages that do not meet the definition of “qualified mortgage.”
NAFCU is convinced that these changes will have an adverse impact on our nation’s credit unions and their 97 million members. Given the urgency of the matter and the impact of the changes on our members, we would like to meet with you and appropriate FHFA staff at the earliest possible time.
I greatly appreciate your attention to our concern. Should you have any questions or would like to discuss these issues further, please contact me at dberger@nafcu.org or (703) 842-2215, or Michael Coleman, Director of Regulatory Affairs at mcoleman@nafcu.org or (703) 842-2244.
Sincerely,
B. Dan Berger
President and CEO