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NAFCU witness Rick Stafford, president and CEO of Tower Federal Credit Union (Laurel, Md.), yesterday told members of a House Financial Services subcommittee that providing loans to borrowers in rural areas and small communities is "at the foundation of what credit unions do."

Stafford, testifying before the House Financial Services Subcommittee on Housing and Insurance, was speaking about the importance of the industry maintaining access to the secondary mortgage market in any future housing finance system.

Responding to a question from subcommittee member Randy Hultgren, R-Ill., Stafford said that if credit unions were to lose access to the secondary mortgage market, borrowers in rural areas especially would be hurt because larger institutions often don't adequately meet their needs.

Wednesday's hearing, "Sustainable Housing Finance: Private Sector Perspectives on Housing Finance Reform," was held to get the private sector's perspective on housing finance reform and the role that the government should play in helping Americans afford a home.

When asked about the current housing finance system, Stafford said "credit unions have confidence" in the system because of the competitive pricing, easy flow of liquidity and technology used to manage mortgages. He urged that these benefits continue in any future housing reforms.

Stafford said credit unions' main concern with the current system is that conservatorship is supposed to be temporary, so the industry would like to see reforms to move the government-sponsored enterprises (GSEs) out of it.

Stafford also testified that the GSEs should be allowed to recapitalize, as did the other panelists, to ensure they are in a safe and sound condition. He said large institutions should not be given control over the housing market, as that would have negative consequences for smaller institutions. Stafford also noted NAFCU's concern for ensuring that the costs of a reformed system not become burdens on small lenders, such as credit unions.

During his testimony, Stafford also shared with the committee NAFCU's core principles for housing finance reform, which the association believes are necessary to guarantee the continued safety and soundness of the credit union industry. He also highlighted 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.

Stafford testified alongside representatives from the Securities Industry and Financial Markets Association, American Bankers Association, Independent Community Bankers of America and Center for Responsible Lending.

Click here to read Stafford's full testimony to the subcommittee.