Credit Unions Want to Keep GSEs, But With an Ex­plicit Guar­an­tee

National Mortgage News - - Secondary - By brad finkel­stein

most credit unions sup­port the sta­tus quo when it comes to the gov­ern­ment-spon­sored en­ter­prises be­cause they are a pri­mary out­let to get mort­gages off of their bal­ance sheets.

Just un­der 60% of those sur­veyed by the Na­tional As­so­ci­a­tion of Fed­er­ally-In­sured Credit Unions said they sold loans to Fan­nie Mae (39%), Fred­die Mac (12%) or both (12%).

Those credit unions on av­er­age sold 37.1% of their 2017 pro­duc­tion to the GSEs, but 22% of the re­spon­dents said they sold pro­por­tion­ally more loans to the en­ter­prises prior to the Great Re­ces­sion.

Among the three sce­nar­ios asked about hous­ing fi­nance re­form, 71% of those sur­veyed sup­port keep­ing the GSEs or cre­at­ing a sim­i­lar out­let to sell loans to with the en­tity hav­ing an ex­plicit gov­ern­ment guar­an­tee.

About 60% of re­spon­dents said they were un­sure about a sce­nario that would elim­i­nate the GSEs and pri­va­tize the mar­ket, but keep a gov­ern­ment guar­an­tee. The re­main­ing re­spon­dents were roughly split be­tween sup­port­ing and op­pos­ing it.

How­ever, over 73% of credit unions were op­posed to elim­i­nat­ing the GSEs, pri­va­tiz­ing the mar- ket and not hav­ing an ex­plicit gov­ern­ment guar­an­tee.

“Ef­fec­tive hous­ing fi­nance re­form that pre­serves a gov­ern­ment guar­an­tee, main­tains un­fet­tered ac­cess to the sec­ondary mar­ket and en­sures fair pric­ing for credit unions based on loan qual­ity, not vol­ume, re­mains key to en­sur­ing mean­ing­ful credit union par­tic­i­pa­tion in the hous­ing mar­ket,” NAFCU said in its Fe­bru­ary Eco­nomic & CU Mon­i­tor.

Among other sec­ondary mar­ket out­lets, 39% sell to the Fed­eral Home Loan Banks, while 11% use credit union ser­vice or­ga­ni­za­tions or a whole­sale lender and 6% sell to Gin­nie Mae or make pri­vate place­ments.

When asked about reg­u­la­tory re­form, around 65% of the re­spon­dents said the abil­ity to re­pay and qual­i­fied mort­gage stan­dards need to be re­vised.

Dur­ing the third quar­ter, credit unions had 10.8% year-over-year growth in first mort­gages and 5.8% year-over-year growth in other forms of real es­tate lend­ing, the NAFCU study found.

That was the high­est third-quar­ter year-over-year growth in both cat­e­gories go­ing back five years.

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