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NAFCU to Ginnie Mae: Provide CUs parity with banks by excluding CUs from proposed capital requirements
NAFCU Regulatory Affairs Counsel Aminah Moore Monday urged the Government National Mortgage Association (Ginnie Mae) to offer credit unions parity with banks by excluding all credit unions from the proposed additional capital requirements imposed on non-depository institutions. The letter was sent in response to Ginnie Mae's request for information (RFI) on its updates to eligibility requirements for single-family mortgage-backed securities (MBS), issued in July.
The proposals would establish Ginnie Mae's capital requirements for credit unions in addition to the NCUA's existing capital framework and new risk-based capital (RBC) rule.
"NAFCU generally supports the proposals in the RFI as it relates to the added net worth and liquidity requirements for all issuers because credit unions typically have higher amounts of net worth and liquidity," wrote Moore. "The RBC requirement as it relates to non-banks or other financial institutions, is appropriate to mitigate risks posed by these underregulated entities and maintain the stability of the housing finance system.
"[…] Much like banks, credit unions should only be subject to the capital requirements set by their prudential regulator, the NCUA," added Moore.
In addition, Moore noted a credit union that uses the NCUA's complex credit union leverage ratio (CCULR) to demonstrate RBC adequacy and offers Federal Housing Administration (FHA) loans or Veterans Affairs (VA) loans may be dissuaded from considering becoming a Ginnie Mae issuer due to the proposed capital requirements.
"NAFCU urges Ginnie Mae to consider the chilling effect that more stringent capital requirements may have on the FHA," concluded Moore.
NAFCU will continue to monitor this issue and will update credit unions via NAFCU Today.