WASHINGTON, DC (November 5, 2013) -- The National Association of Federal Credit Unions (NAFCU), in a hearing before the Senate Banking Committee today, pushed for continued access to the secondary mortgage market for credit unions and fair pricing based on loan quality in connection with any housing finance reform measure. The association also stressed the importance of a government guarantee for payment of principal and interest on mortgage-backed securities in helping to stabilize the market.
John Harwell, associate vice president of risk management at Apple FCU in Fairfax, Va., testified on behalf of NAFCU at the hearing titled “Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market.”
In his testimony, Harwell urged lawmakers to support guaranteed secondary-market access for credit unions in connection with any housing finance reform package. He also urged that any reform ensure fair pricing based on the quality of loan underwriting, not volume. “NAFCU believes a healthy, sustainable and viable secondary mortgage market must be maintained. Credit unions must have unfettered, legislatively guaranteed access to such a market,” he said. “In addition, in order to achieve a healthy, sustainable and viable secondary market, NAFCU believes there must be healthy competition among and between market participants in every aspect of the secondary market.”
He cited a 2012 NAFCU real estate survey that highlighted the growing use of government-sponsored enterprises among credit unions. The survey found that more than three-fourths of respondents indicated that credit union board policy restricted the percentage of real estate loans that could be held on their balance sheets, with a median limitation of 35 percent. “Without these critical relationships, credit unions would be unable to provide the services and financial products their memberships demand and expect,” Harwell explained.
He also reminded committee members how credit unions demonstrated their commitment to the American people and their members during the financial crisis. “As has been noted by members of Congress across the political spectrum, credit unions were not the cause of the recent economic crisis, and examination of their lending data indicates that credit union mortgage lending has outperformed bank mortgage lending during the recent downturn.”
In his testimony, Harwell applauded committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, for their bipartisan work to address housing finance reform. He also recognized the work of Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn., for laying the foundation for housing finance reform with the introduction of S. 1217, the “Housing Finance Reform and Taxpayer Protection Act of 2013.”
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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.