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CUNA repeatedly urged mortgage loan limits not be reduced

CUNA General Counsel Eric Richard On FHFA announcement it won’t reduce loan limits

(May 13, 2014) — NOTE: Today, Federal Housing Finance Agency (FHFA) Director Mel Watt announced that the agency will not reduce loan limits and will continue allowing Fannie Mae and Freddie Mac to purchase loans at the current rate. The FHFA also released a strategic plan stating it will not involve itself in policy decisions on housing reform for the future of the government-sponsored enterprises (GSEs). CUNA General Counsel Eric Richard issued the following statement:

“This is welcome news for borrowers and credit unions alike. CUNA has repeatedly urged that loan limits not be reduced and we are gratified that this position has been accepted. The health of the housing finance market requires that the current system be kept viable as long as possible until Congress acts on reforms and we are pleased that the agency is taking steps to help ensure that outcome.”

BACKGROUND: CUNA has advocated for Fannie Mae and Freddie Mac to continue to purchase loans when the borrower has a debt-to-income (DTI) ratio of higher than 43% but also has other compensating strengths. CUNA has also urged that the FHFA make it clear that creditors will be able to continue selling to the GSEs mortgage loans involving a borrower’s DTI that is higher than 43%, the threshold for a “qualified mortgage” under the Consumer Financial Protection Bureau’s “Ability to Repay” rule, when the borrower has the capacity to repay the loan.  CUNA President/CEO Bill Cheney and senior CUNA staff met with Watt and members of his team in April.

 

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