Treasury, FHFA suspend troublesome PSPA provisions
The Treasury and Federal Housing Finance Agency (FHFA) Tuesday announced the suspension of several parts of the 2021 Preferred Stock Purchase Agreements (PSPAs). CUNA brought credit union concerns to the attention of FHFA Acting Director Sandra Thompson on several of the suspended provisions in a letter and during meetings with Thompson and her staff.
FHFA will consult with Treasury on the scope of the review and on any recommended revisions to the PSPA requirements.
Suspended provisions that CUNA expressed concerns with include the 7% cap on investment and second home loans.
“This cap sidelines credit unions, which results in more consumers obtaining loans from predatory lenders or at higher costs than necessary... The FHFA should prioritize liquidity for community lenders like credit unions that often offer smaller loans to more underserved populations. This would ensure that those consumers can obtain the loans they need safely and at a favorable rate,” reads CUNA’s July 1 letter to Thompson.
CUNA added that the cap may further increase the cost of financing affordable rental housing, and unnecessarily increases the cost of credit and housing for consumers.