The National Association of Federally-Insured Credit Unions (NAFCU) is among a group of industry organizations that are expressing concern about recent amendments to the government-sponsored enterprises’ (GSEs) Preferred Stock Purchase Agreements (PSPAs).
In January, the Treasury Department and Federal Housing Finance Agency (FHFA) announced the PSPA amendments, which allow the GSEs to retain earnings until they meet capital rule requirements. Also, they announced that the Treasury will permit the GSEs to raise private capital and exit conservatorship once certain conditions are met, among other changes.
NAFCU officials say the changes would add to the GSEs’ compliance costs and could result in increased fees for borrowers and lenders. NAFCU and other industry groups sent a letter to Treasury Secretary Janet Yellen and FHFA Director Mark Calabria, the White House, and Congress, urging the agencies to delay the PSPA changes. Further, they ask the agencies to conduct a broader review of their impact on mortgage market liquidity, low- and moderate-income borrowers, and borrowers of color to determine revisions that should be made.
“…[T]here must be confidence that the agencies’ conservatorship policies have struck an appropriate balance between maintaining a sound financial condition and facilitating mortgage market liquidity and access in underserved markets,” the groups wrote. “The report should also make public any fair housing and fair lending analysis of the PSPA amendments that either agency has completed.”
NAFCU and the other groups made several recommendations, including raising the limit on the use of the cash window to limit the impact on smaller lenders; removing new mortgage product covenants; removing restrictions on loan features and volumes that could create constraints in the market; and
providing an impact analysis of the PSPA amendments and delaying the implementation dates of the changes.
NAFCU added that the amendments could hinder credit unions’ use of the temporary GSE patch. The Consumer Financial Protection Bureau is currently considering delaying the effective date of its revised general qualified mortgage (QM) definition. This would also extend the use of the GSE patch to Oct. 1, 2022. However, the PSPA amendments restrict the GSEs’ ability to acquire GSE patch loans before July 1, 2021.