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NAFCU Tuesday sent member credit unions a Regulatory Alert detailing the Federal Housing Financial Agency’s (FHFA) request for information (RFI) on the government-sponsored enterprises’ (GSEs) single-family pricing framework. In addition, FHFA Director Sandra Thompson provided insights into the issue during a House Financial Services Committee oversight hearing.

NAFCU Vice President of Legislative Affairs Brad Thaler provided the committee with credit union priorities for the agency and housing finance ahead of the hearing. Additionally, the House Financial Services Committee holds a markup today that includes a bill that would cancel the single-family pricing framework.

In the Regulatory Alert, NAFCU notes that the FHFA is seeking responses to 10 questions related to the GSEs’ returns on capital, guarantee fee components, and Enterprise Regulatory Capital Framework (ERCF) procedures, as well as feedback on the pricing framework in general. The association flags that:

• the GSEs have been subject to higher capital requirements that depress their returns on stronger credit profile single-family mortgage portfolios and other mortgage acquisitions since the ERCF took effect in 2021 (NAFCU recently provided comments on proposed amendments to the ERCF);
• the FHFA describes the GSEs’ current “mid-single digit” returns on all single-family mortgage portfolios as “not commercially reasonable;” and
• the FHFA in 2022 targeted increased upfront guarantee fees for many high balance loans, second home loans, and cash-out refinance loans while reducing or eliminating various guarantee fees for loans made to many first-time borrowers, other low-income borrowers, borrowers in some underserved communities, and loans made through various affordable housing programs.

During her testimony, Thompson reiterated the FHFA prioritizes safety and soundness of the GSEs and is tasked with supporting “liquidity, stability, and affordability by facilitating responsible access to mortgage credit through their activities in the secondary market.” The changes to the pricing framework, including the GSEs’ upfront fees, are intended to align fees with the ERCF and meet the agency’s mission and goals.

“These objectives include increasing pricing support for many creditworthy first-time homebuyers, while ensuring a level playing field for small and large lenders, fostering capital accumulation at the Enterprises, and achieving viable returns on capital over time, which combine to help protect taxpayers,” Thompson said in her testimony.

Thompson also discussed the GSEs’ new credit score requirements, requirement to obtain prior approval before offering new products or engaging in new activities, payment deferral policies, equitable housing finance plans, and more. Lawmakers questioned Thompson on Federal Home Loan Banks – including affordable housing and funds from the banks that were tied up in recent bank failures – liquidity, ensuring access and a level playing field, and increasing transparency at the agency.

Comments on the RFI can be submitted to NAFCU via the Regulatory Alert until July 25; feedback is due to the FHFA Aug. 14.

NAFCU will continue to work with the FHFA and lawmakers to ensure credit unions have the ability to provide safe, sustainable, and equitable housing for all communities.