CUs need to be included in the FHFA’s proposed small member goal

January 30, 2019

CUNA wrote to the Federal Housing Finance Administration (FHFA) Tuesday opposing its proposed Federal Home Loan Bank (FHLB) affordable housing goals regulations because they specifically exclude credit unions from being eligible to participate in the newly created smaller member participation goal. CUNA sent its comment letter in response to FHFA’s proposed regulation on its affordable housing goals.

“As a result [of credit unions being excluded], thousands of credit unions—all members of the Federal Home Loan Banking System— would be ineligible to participate in at least 50% of all purchases under the Acquired Mortgage Asset Program,” the letter reads. “Though many credit unions are small FHLB members that play a vital role in the mortgage markets and rely upon their FHLBs as partners in achieving the liquidity necessary to provide mortgage credit, they do not satisfy the proposal’s definition of a community financial institution.”

The proposal specifically defines a “community financial institution,” as those institutions whose deposits are insured by the Federal Deposit Insurance Corporation Act. Thousands of credit unions, whose deposits are insured by the National Credit Union Share Insurance Fund  are members of the FHLB system and have assets well below the proposed small member threshold.

FHFA acknowledges that small members “are more likely to produce affordable home loans to low-income households” and “rely on their Bank membership for a connection to the secondary mortgage market.”

“These facts are especially true for credit unions who depend upon their FHLB to purchase their originated mortgages and who also, according to CUNA’s internal analysis of the most recent data from the Home Mortgage Disclosure Act, have a higher percentage of mortgage originations to low- and moderate-income families,” the letter reads. “Accordingly, CUNA believes that it is imperative that the FHFA revise its proposal to ensure that credit unions are eligible to participate in the small member participation requirement.”

CUNA called for the revision to be made prior FHFA issuing a final rule.

Additional details can be found on CUNA’s Removing Barriers Blog.