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NAFCU witness Rick Stafford, president and CEO of Tower Federal Credit Union (Laurel, Md.), today will share during a House Financial Services Committee hearing credit unions' views on housing finance reform and the importance of maintaining secondary market access for the industry.

This will be NAFCU's 12th overall time testifying during the 115th Congress. Stafford also testified in October 2017 during a hearing on housing finance reform priorities before a House Financial Services subcommittee.

The hearing, rescheduled from a prior date, is set to begin at 9 a.m. Eastern today and will focus on draft legislation from House Financial Services Committee Chairman Jeb Hensarling, R-Texas. The proposal would preserve a NAFCU-sought explicit government guarantee on mortgage-backed securities (MBS) and seeks to protect lending opportunities for small lenders.

The legislation, the Bipartisan Housing Finance Reform Act, would also repeal the government-sponsored enterprises' (GSEs) charters and would instead use Ginnie Mae as the provider of the explicit government guarantee on MBS. Currently, Ginnie Mae backs payments of principal and interest to those that invest in the Federal Housing Administration (FHA) and other government-insured loans. The proposal also establishes a structure for private credit enhancers in order to spread risk on mortgages to be securitized and protect taxpayers.

In prepared testimony, Stafford will acknowledge positives of the proposal, "including the requirement of strong capital standards, a guaranteed cash window for small lenders who are permitted to retain the servicing rights on their loans, the maintenance of a vibrant [Federal Home Loan Bank (FHLB)] System, and the preservation and enhancement of credit risk transfer transactions and the [Common Securitization Platform (CSP)]." He will further detail some credit union concerns about changes to the system, and the potential impacts and costs they could have on credit unions, as lawmakers consider the bill and other housing finance reform efforts.

Stafford will also share with the committee NAFCU's core principles for housing finance reform, which it believes should be included in any reform effort to guarantee the continued safety and soundness of the credit union industry. His testimony will cover the longstanding and vital relationship between credit unions and the GSEs, and how important it is for credit unions to continue to have unfettered access to the secondary market with fair pricing based on loan quality, instead of volume.