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NAFCU joined with several other trade groups Tuesday to reiterate concerns to the Treasury Department and Federal Housing Finance Agency (FHFA) about recent amendments to the government-sponsored enterprises' (GSEs) Preferred Stock Purchase Agreements (PSPAs). NAFCU last month flagged that the changes would add to the GSEs' compliance costs and could result in increased fees for borrowers and lenders.

The Treasury and FHFA announced the PSPA amendments in January, which allow the GSEs to retain earnings until they meet capital rule requirements. The announcement also indicated that Treasury will permit the GSEs to raise private capital and exit conservatorship once certain conditions are met, in addition to restructuring the department's investment in each enterprise. The PSPAs also establish limits on the purchase of certain types of mortgages.

In the letter to Treasury Secretary Janet Yellen and FHFA Director Dr. Mark Calabria – as well as the White House and Congress – the groups urged the agencies to delay the PSPA changes and conduct a broader review of their impact on mortgage market liquidity, low- and moderate-income borrowers, and borrowers of color to determine revisions that should be made. Revisions recommended by the groups include:

• raising the limit on use of the cash window to limit the impact on smaller lenders;
• removing new mortgage product covenants, which place purchase limits on certain single-family loans and will exacerbate affordability and access challenges for creditworthy borrowers who may have higher loan-to-value ratios and debt-to-income ratios;
• removing restrictions on loan features and volumes that could create constraints in the market; and
• providing an impact analysis of the PSPA amendments and allowing for more transparency by delaying the implementation dates of the changes and providing stakeholders and the public with additional data and explanation.

"…[T]here must be confidence that the agencies’ conservatorship policies have struck an appropriate balance between maintaining a sound financial condition and facilitating mortgage market liquidity and access in underserved markets," the groups wrote. "The report should also make public any fair housing and fair lending analysis of the PSPA amendments that either agency has completed."

NAFCU has also raised another PSPA-related issue to the FHFA: How these amendments could hinder credit unions' use of the temporary GSE patch. The CFPB is currently considering delaying the effective date of its revised general qualified mortgage (QM) definition, which would also extend the use of the GSE patch to Oct. 1, 2022. However, the PSPA amendments restrict the GSEs' ability to acquire GSE patch loans before July 1, 2021.

NAFCU will continue to work closely with the FHFA and Treasury to ensure efforts to prepare the GSEs for the end of conservatorship do not hinder vulnerable consumers' access to affordable mortgages.