WASHINGTON–A Senate committee will hear today from a credit union exec with a message that if Congress doesn’t get secondary market reform right, many credit unions will not be able to make home loans to members.
The testimony is being offered to the Senate Committee on Housing and Urban Affairs as part of a hearing titled, “Housing Finance Reform: Maintaining Access for Small Lenders.”
In written testimony submitted to the committee, Tim Mislansky, senior vice president/chief lending officer with Beavercreek, Ohio-based Wright-Patt Credit Union, who is testifying on behalf of CUNA, said the $3.6-billion CU made 4,631 mortgage loans in 2015, 3,072 of which went to its own members. Mislannsky is also president of Wright-Patt’s wholly-owned CUSO myCUmortgage, which is a CUSO. Mislansky said that as Congress considers housing finance reform, it is critical that credit unions have equitable and readily-available access to a functioning, well-regulated secondary market and a system that will accommodate member-demand for long-term, fixed-rate mortgage products in order to ensure they can continue meeting their members’ mortgage needs.
Mislansky noted that historically credit unions have been largely portfolio lenders and that without a functioning secondary market, credit unions would “most likely severely limit the amount of first mortgage lending conducted on behalf of their members as they simply would not have the liquidity to fund and hold the loans.”
“Servicing member loans is very important to credit unions, for a number of reasons,” he said in his written statement. “As member owned cooperatives, credit unions are driven by a desire to provide high quality member service. Many credit unions are reluctant to sell the core function of serving members to others. Credit unions may service loans in-house or outsource to a trusted third-party, but in doing so they maintain a say in how the loans are serviced. This is especially important when borrowers run into financial challenges so that the credit union may work to keep the borrower in their home. Credit unions are also concerned that if they sell the servicing of the mortgage loan, that the third-party servicers will use the data they gather about credit union members to market competing products or services. In addition, credit unions benefit from the steady servicing income stream. As such, many credit unions service both the substantial portfolios of loans they hold on their own balance sheets, and the loans they have sold to the secondary market. Currently, in addition to the $366 billion of first mortgages that credit unions hold in portfolio, they also service $198 billion of loans they have sold.”
Mislansky’s complete testimony can be found in CUToday.info’s The Gov.