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President Donald Trump yesterday issued a presidential memorandum initiating reforms to the housing finance system. Trump's action came as NAFCU's Dan Berger and Ann Kossachev met with Federal Housing Finance Agency (FHFA) Acting Director Joseph Otting to discuss housing finance reform efforts.

Also Wednesday, NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt shared credit unions' priorities for housing finance reform with the Senate Banking Committee (read more here). Many of the provisions within Trump's memo align with NAFCU's principles and Hunt's testimony, including maintaining the cash window and establishing capital requirements for the government-sponsored enterprises (GSEs). 

"A healthy secondary mortgage market is of the utmost importance to Americans, and we support efforts by the Trump administration to reform our housing finance system in a way that promotes competition and puts an end to taxpayer bailouts," said Berger, NAFCU's president and CEO.

"To this end, NAFCU will continue to push for legislative measures to guarantee access to the secondary mortgage market for lenders of all sizes, loan pricing at the GSEs that is based on quality not quantity, and the establishment of an explicit government guarantee at the GSEs to provide certainty in the marketplace. To protect taxpayers and the safety and soundness of the housing finance system, the GSEs also should be permitted to rebuild capital."

In a release summarizing the memo, two primary goals are outlined:

1. Promote competition and protect taxpayers: The reforms will aim to end the conservatorship of GSEs Fannie Mae and Freddie Mac in addition to promoting competition and protecting taxpayers against bailouts. Trump is directing the Treasury Department to prepare a reform plan for the GSEs, and the Department of Housing and Urban Development (HUD) to prepare a reform plan for the housing finance agencies it oversees. He also wants to work with Congress on a comprehensive solution.
2. Help people achieve the American Dream: The reforms will help more Americans achieve homeownership by improving access to sustainable mortgages, preserving the 30-year fixed-rate mortgage and increasing access to federal programs to help finance first-home purchases.

Full memo details, including specific instructions for Treasury and HUD in their reform efforts, are available here.

During Wednesday's meeting with Otting, Berger and Kossachev, NAFCU's director of regulatory affairs, shared credit unions' principles for housing finance reform and also discussed ongoing efforts at the FHFA related to the GSEs' use of credit score models and their capital requirements. Berger last month sent a letter to Otting stressing the importance of credit unions' access to the secondary mortgage market and explaining the relationship credit unions have with the GSEs.

Dr. Mark Calabria, who has been nominated to lead the FHFA, awaits Senate confirmation.

NAFCU has led efforts to ensure credit unions' unfettered access to the secondary mortgage market in any housing finance reform, and has urged the Trump administration and Congress to work together on a comprehensive solution.

The association also met with Treasury Counselor Craig Phillips Tuesday.