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:
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.
CUNA also asked that the FHFA “continue to take a strong stand” against congressional proposals to raise the fees in order to offset unrelated spending elsewhere in the federal budget.
CUNA supports legislation that would prevent guarantee fees from being used to offset unrelated federal spending and successfully fought to drop a provision from last year’s highway funding bill that would have allowed the fees to be used for other purposes.