NAFCU: Credit Unions Need Continued Access to Secondary Mortgage Market; Regulatory Relief Found In Path Act

WASHINGTON, DC (July 18, 2013) — The National Association of Federal Credit Unions (NAFCU), in a hearing before the House Financial Services Committee today, will stress the importance of credit unions maintaining unfettered access to the secondary mortgage market while also lauding the regulatory relief found in the “Protect American Taxpayers and Homeowners (PATH) Act.”

Janice Sheppard, of Southwest Airlines FCU in Dallas, will testify on behalf of NAFCU at the hearing, titled “A Legislative Proposal to Protect American Taxpayers and Homeowners (PATH) by Creating a Sustainable Housing Finance System.” Sheppard will make clear the association’s primary concerns with any housing finance reform are:

  • continued unfettered access to the secondary mortgage market including adequate transition time to a new system – should lawmakers see such a change necessary; and
  • recognition of the quality of credit union loans through a fair pricing structure.

Sheppard, in her written testimony, lauds committee Chairman Jeb Hensarling, R-Texas, for his leadership on the issue and for recognizing the need for a sustainable housing finance system moving forward. “Over the past five months, the Financial Services Committee has held 11 hearings on the state of housing finance and how public policy decisions will help shape the future in this regard,” Sheppard says. “This kind of robust discussion and debate is welcomed by our nation’s credit unions.”

Hensarling’s draft “PATH Act” would phase out Fannie Mae and Freddie Mac over a five-year period. Sheppard says NAFCU still has concerns about how the lack of a government role would affect credit union access to the secondary market.

“The government plays an important role in helping to set standards and bring conformity to the housing market,” Sheppard notes. “Changing standards to eliminate conformity, or to make it difficult, could make it harder for credit unions to sell loans onto the secondary market as they do not have the economies of scale larger market participants enjoy.”

Sheppard also praises the draft bill’s Title IV, “Removing Barriers to New Investment.” She says Title IV represents “a very important aspect of housing finance reform and the PATH Act” and adds NAFCU is pleased to see it included. Among its provisions are exclusions from the Consumer Financial Protection Bureau’s “qualified mortgage” cap on points and fees. This “will go a long way toward ensuring many affiliated loans, particularly those made to low- and moderate-income borrowers, attain ‘qualified mortgage’ status and therefore are still made in the future,” she says.

Sheppard acknowledges that Hensarling’s legislation is “the most comprehensive proposal put forward to date” and an important step in the debate on housing finance reform.

For the full testimony, go to

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The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public. 

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