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CUNA backs housing stabilization plan
WASHINGTON (3/25/08)—A homeownership retention plan being drafted by Rep. Barney Frank (D-Mass.) could benefit many consumers facing mortgage foreclosures and credit unions stand ready to help, the Credit Union National Association (CUNA) said in a letter to the plan’s designer Monday. Addressing Frank, CUNA President/CEO Dan Mica reminded the House Financial Services Committee chairman that credit unions have not made the types of mortgages that provided the impetus of the current economic downturn. However, Mica stressed, credit unions stand willing and able to assist homeowners facing foreclosure. Under Frank’s FHA Housing Stabilization and Homeownership Retention Act proposal, the Federal Housing Administration (FHA) would be allowed to guarantee written-down mortgages. CUNA said this provision would be an appropriate tool to help struggling homeowners given the current economic situation and would act as incentive for more lenders to accept mortgage write-downs. “In general, credit unions are doing whatever they can to help borrowers trapped in mortgages they cannot afford, but cannot responsibly make loans to members in excess of the value of the borrower’s home,” Mica wrote, explaining CUNA’s support of Frank’s plan that could enable credit unions to do more for their members. Mica encouraged Frank to consider another action that would “greatly enhance” the ability of credit unions to provide assistance to troubled mortgage borrowers: subject credit unions to a risk-based capital system. “A risk-based system, like the one proposed in H.R. 1537 (the Credit Union Regulatory Improvements Act, known as CURIA), would more accurately reflect the capital needed for a credit union to be considered well capitalized and free additional capital to help borrowers refinance mortgages they received from other lenders. “Risk-based capital for credit unions would be a safe and sound tool for credit unions to use to provide even more assistance to homeowners facing foreclosure,” Mica noted. The CUNA letter also recommended that a consumer counseling component to the program could only enhance its benefit to consumers. Use the resource below to read the CUNA letter.
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