ARLINGTON, Va.—NAFCU is urging NCUA to share next steps regarding the agency’s asset securitization proposed rule.
The rule was proposed in July 2014. NCUA included the rule in its fall rulemaking agenda in November.
In the letter to Board Chairman Rick Metsger and Board Member J. Mark McWatters, NAFCU Regulatory Affairs Counsel Ann Kossachev wrote, “NAFCU urges the NCUA to provide an update on the status of the asset securitization proposed rule and the agency’s anticipated next steps. In addition, NAFCU requests the opportunity to meet with the NCUA to discuss the proposal, credit unions’ concerns, and suggestions for improving a future iteration of the rule to best address the industry’s needs.”
Kossachev also provided previous recommendations that NAFCU has suggested for improving the language of the proposal, including:
* Expanding the eligibility of loans beyond those originated by the securitizing credit union, in particular, by permitting the use of purchased loans needed to complete a pool as well as allowing the aggregation of loans by credit union service organizations.
* Providing flexibility in the levels of residual and retained interests in securitized assets that a credit union may hold.
* Authorizing credit unions to have special purpose vehicles with the authority to enter into derivative transactions.
* Providing additional clarifications on the types of securitization transactions in which credit unions may engage.
“NAFCU strongly urges the NCUA to evaluate the accessibility of the proposed asset securitization mechanism for credit unions of all sizes,” Kossachev continued. “Smaller credit unions may not have the capacity to originate as many loans as are currently envisioned to be able to participate in a securitization program. It is essential that the majority of credit unions are able to take advantage of the authority outlined in the proposed rule; otherwise its adoption is practically worthless. One measure that would help ensure credit unions overcome such a limitation is a cost-efficient credit enhancement for investors. Thus, NAFCU asks the NCUA to carefully reconsider the proposed rule’s prohibition on ‘implicit recourse.’”
Kossachev also expressed NAFCU’s hope for further progress on the proposal in the coming months.