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NAFCU President and CEO Dan Berger, in a letter sent Thursday to Federal Housing Finance Agency (FHFA) Director Dr. Mark Calabria, expressed concerns that credit unions are being disadvantaged by the government-sponsored enterprises' pricing methodology.

NAFCU strongly supports efforts to end the GSEs' practice of volume-based discounts. However, after reviewing the FHFA's recent report, "Fannie Mae and Freddie Mac Single-Family Guarantee Fees in 2018," the association concluded that further action is needed to ensure fair pricing.

According to the report data, 97 percent of the reporting credit unions that sold loans to the GSEs in 2018 would be classified as extra-small vendors by the report. Reviewing the cash window, NAFCU found that while extra-small lenders had guarantee fee increases levied against them, the GSEs "earned their highest risk-adjusted profits on cash-window transactions from extra-small lenders in 2018."

"Considering the credit union industry is primarily populated with small lenders and many of them rely on the GSEs for access to the secondary market, these practices disproportionately harm credit unions," Berger wrote. "This reliance on the GSEs, coupled with the findings in this Report, means that more work must be done at the GSEs to ensure fair pricing and equal access for credit unions and other small lenders.

"NAFCU requests that the FHFA take immediate action to resolve this issue and protect small lenders' ability to access the secondary market to obtain liquidity to continue to provide mortgages to members of their communities," he added.

NAFCU has long led efforts to ensure credit unions' unfettered access to the secondary mortgage market is maintained in any housing finance solution, and has consistently shared its core principles for housing finance reform with lawmakers and administration officials.

In March 2019, NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt testified before the Senate Banking Committee and recommended that housing finance reform should maintain a cash window at the guarantors, create an explicit government guarantee, and prohibit volume-based discounts on pricing.

NAFCU-member credit unions also raised pricing concerns during a meeting with Calabria in June. Additional insights from the meeting can be found in NAFCU's member-only CFO and Compliance, Risk & BSA Networks.

At NAFCU's Congressional Caucus in September, Calabria discussed the FHFA's efforts during the GSEs' conservatorship to ensure uniform pricing and avoid practices of volume-based pricing discounts that were in place leading up to the housing crisis. He advocated that these pricing safeguards stay in place to level the playing field for small lenders and later that month issued a directive to do so.

NAFCU attended a joint trades meeting with Calabria in October to further discuss housing finance reform efforts and ways to ensure fair pricing and access.