As Prepared for Delivery on December 16, 2021
Thank you, Mr. Chairman and thank you, Tom, Ian, John, and team for your work on this final rule.
The changes in this final rule are appropriate and timely. First mortgage loans, which total $462 billion, represent 38 percent of federally insured credit union loan portfolios. This is up from $229 billion ten years ago; an increase of 102 percent. More and more Americans are turning to credit unions to help them purchase their homes.
While consumers benefit by having the choice of credit unions for mortgages, the back-office requirements for the credit unions can be a challenge. This rule gives federal credit unions the ability to scale up mortgage servicing for their own members by purchasing mortgage servicing assets from other credit unions. Those that want to focus on lending will have the choice to sell their mortgage servicing rights to other credit unions — entities with similar member service motives and culture. The rule provides federally insured credit unions another avenue to sell their MSAs, which could generate a higher selling price. The additional flexibility not only allows smaller institutions that want to grow and sell their mortgages to have more options to sell, but also allows growth opportunities for the federal credit unions that purchase those MSAs.
Provided the federal credit union understands and prepares for the potential risks involved, MSAs can provide an ongoing stream of income to its bottom line. This rule helps keep the MSAs within the credit union system. It also supports cooperation between credit unions — a unique feature of the credit union movement.
I am a firm believer in the importance of regulatory clarity. This final rule makes consistent the language among the regulations covering incidental powers and investments. It also uses the same standard for federal credit unions when buying certain eligible obligation which further supports regulatory clarity. The final rule provides more choice, growth opportunities, and another avenue for cooperation for federally insured credit unions. I am pleased to support it.
Thank you, Mr. Chairman. That concludes my remarks. I do have one question and it is related to regulatory clarity.
Question: This rule only permits federal credit unions to purchase MSAs from other insured federally insured credit unions. Can you explain why it doesn't permit them to buy these assets from other sellers?
Thank you, Mr. Chairman. That concludes my remarks.