WASHINGTON—A CEO who lives in a place where the median home price is $1 million and the median income is $35,000 told the Federal Housing Finance Agency credit unions play a critical role in sustainable home ownership, especially for low- and moderate-income consumers.
Appearing on behalf of NAFCU, Monica Belz, CEO of Kauai Government Employees FCU, told a FHFA listening session on sustainable homeownership that, “Credit unions play an important role in the housing market to help consumers—especially low-income borrowers—afford mortgages.”
Belz told the FHFA NAFCU supports the GSEs’ role as a market-maker in the secondary mortgage market and has previously encouraged the FHFA to consider pilot programs for low-or zero-down payment mortgage loans that help borrowers build wealth, such as the Wealth Building Home Loan (WBHL), as developed by the American Enterprise Institute.
“These types of loans are especially helpful for very low-and low-income borrowers and should be supported by the FHFA and the GSEs as part of an overall strategy to support affordable, sustainable homeownership,” Belz said.
Belz said a pilot program would help to develop a secondary market for these types of loans, which would, in turn, help credit unions make more of these loans to support their communities.
‘Vulnerable Communities’
“On Kaua’i, we have no ethnic majority. The backbone of our community are our local families who run small businesses, work in agriculture, and often hold two-three jobs in our tourist dependent economy in order to live paycheck to paycheck,” said Belz. “The median single family home price is $1 million. The median income for a single adult in Hawaii is $35,000 a year. The cost of living on Kaua’i continues to rise due to systemic factors-for example, we import over 80% of our food. Our vulnerable communities who are at a distinct disadvantage and experience the largest homeownership gaps include native Hawaiians, minority families, single mothers, and our growing low-and moderate-income households. Financial instability continues to plague our community…
“Regulators must ensure that credit unions and community based financial institutions have access to the secondary mortgage market,” continued Belz. “An efficient and adequately regulated secondary market is essential to providing affordable mortgages to minority communities. Access to this market is an important, reliable source of capital for lenders and therefore consumers. Without this access, interest rates would be unaffordable for many Americans, including those in low-and moderate-income communities and areas with little to no access to financial institutions. A poorly functioning secondary market impedes growth in the primary mortgage market and the economy, resulting in a widening disparity between racial and socio-economic shares in homeownership.
Communities Would Suffer
“Without options for community lenders like credit unions to sell their mortgage loans to obtain much-needed liquidity to continue making loans to their members, the credit unions and the communities they serve will suffer,” Belz concluded.