Washington, DC – Leaders of the National Community Reinvestment Coalition (NCRC), Community Home Lenders Association (CHLA), Community Mortgage Lenders of America (CMLA), Corporation for Enterprise Development (CFED), Leadership Conference on Civil and Human Rights, Leading Builders of America, League of United Latin American Citizens (LULAC), NAACP and the National Urban League released the following joint statement in anticipation of Treasury Secretary Steve Mnuchin’s testimony before the U.S. Senate Banking Committee tomorrow and in response to FHFA Director Mel Watt’s testimony last week:
As representatives for small lenders and affordable housing advocates, we are buoyed by the insistence last Thursday by Director Mel Watt as conservator of Fannie Mae and Freddie Mac that they must rebuild their capital buffers in order to protect against the foreseeable risk to the housing market of any short-term operating losses requiring a draw from the U.S. Treasury. We believe that last week’s testimony by Dir. Watt and the testimony this week by Secretary Mnuchin provide a critical opportunity for the two agencies to finally set out a path forward for the Enterprises that ensures that they will continue to facilitate affordable mortgage credit to the nation working families and underserved communities and equitable access to the secondary market for small lenders. It simply makes no sense for either FHFA or Treasury to allow any type of housing market disruption or investor uncertainty to occur by allowing the Enterprises to operate with zero capital buffers. It is also inconsistent with the President’s goal of preventing taxpayer-funded bailouts. Both FHFA and Treasury are well aware that accounting variability at the the Enterprises, non-credit related factors and even tax reform — factors that have nothing to do with either companies’ profitability today – could necessitate a draw from the U.S. Treasury. While FHFA has the explicit authority under its Senior Preferred Stock Purchase Agreements (PSPAs) with Treasury to suspend dividend payments to the U.S. Treasury, we believe FHFA and Treasury should be of one accord in ensuring access to affordable homeownership and to the Enterprises operating in a safe and sound manner. Too much is at stake for the $5 trillion agency-backed mortgage market and the thousands of low- and moderate income families around the country that rely on liquidity in the secondary market for affordable rental housing and homeownership opportunities.
