The vast majority of credit unions reject the Republicans’ plan to privatize Fannie Mae and Freddie Mac and insist that the government retain a role in the secondary mortgage market, according to a new survey by the National Association of Federal Credit Unions (NAFCU).
NAFCU’s monthly Economic & CU Issues Monitor found almost all credit unions that are offering mortgages, 88.7%, use the secondary market, and 88.9% plan to do so going forward. And 84% of credit unions oppose the full privatization of Fannie and Freddie without a government guarantee, as GOP lawmakers are proposing as part of reform of the government sponsored enterprises.
“Credit unions see the GSEs as important components to their mortgage lending programs,” said Tun Wai, chief economist for NAFCU, of the new survey.
Republican leaders in the House have proposed a number of bills that would phase out Fannie and Freddie, and the government’s role in the secondary market, with the aim of bringing private capital back into the market. Since the collapse of the mortgage market and the abandonment of private label mortgage-backed securities, an estimated 95% of all single family homes are financed with government help, either through Fannie, Freddie or one of the other GSEs.
Almost half the NAFCU survey’s respondents (46%) said they would be willing to pay a fee in order to keep the government guarantee provided by Fannie and Freddie.
The survey also found broad opposition to pending risk retention proposals that would require all borrowers whose loans are sold to Fannie or Freddie make a down payment of at least 20%.
NAFCU fund that 69.2% of respondents said it would be a problem if the 20% requirement is enacted. About two-thirds of credit unions said this would not help their credit unions.