CUNA urges FHFA to ensure parity when dealing with GSEs

The Federal Housing Finance Agency (FHFA) should work to ensure that Fannie Mae and Freddie Mac activities, including credit risk transfers, do not give advantages to lenders that conduct larger amount of business with the enterprises, CUNA believes.

CUNA submitted a comment letter this week on the FHFA’s request for input on single-family credit risk transfers.

In its letter, CUNA highlighted the types of credit risk transfer strategies that work best for small lenders. According to CUNA, those strategies have 2 primary features:

  • They are “volume-blind,” in that they do not require a particular number of originations in order to make economic sense for a given lender; and
  • They do not require significant risk-retention for smaller lenders who are generally less equipped and do not have the capacity or flexibility on their balance sheet to manage that risk effectively.

In the letter, CUNA also urged the FHFA to refrain from increasing guarantee fees, which are used to protect against credit-related losses in the mortgage portfolios of Fannie Mae and Freddie Mac, arbitrarily without regard to the risk profile of the loans guaranteed by Fannie and Freddie.

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