WASHINGTON—Are credit unions being putting at a disadvantage by the government-sponsored enterprises' pricing methodology?
NAFCU President and CEO Dan Berger made that assertion in a letter to Federal Housing Finance Agency (FHFA) Director Dr. Mark Calabria.
NAFCU said it strongly supports efforts to end the GSEs' practice of volume-based discounts. However, after reviewing the FHFA's recent report, "Fannie Mae and Freddie Mac Single-Family Guarantee Fees in 2018," the association concluded that further action is needed to ensure fair pricing.
According to the report data, 97% of the reporting credit unions that sold loans to the GSEs in 2018 would be classified as extra-small vendors by the report. Reviewing the cash window, NAFCU said it found that while extra-small lenders had guarantee fee increases levied against them, the GSEs "earned their highest risk-adjusted profits on cash-window transactions from extra-small lenders in 2018."
‘Take Immediate Action’
"Considering the credit union industry is primarily populated with small lenders and many of them rely on the GSEs for access to the secondary market, these practices disproportionately harm credit unions," Berger wrote. "This reliance on the GSEs, coupled with the findings in this report, means that more work must be done at the GSEs to ensure fair pricing and equal access for credit unions and other small lenders.
"NAFCU requests that the FHFA take immediate action to resolve this issue and protect small lenders' ability to access the secondary market to obtain liquidity to continue to provide mortgages to members of their communities," Berger added.