As Prepared for Delivery on December 16, 2021
Federal credit unions have come a long way since the NCUA created the prohibition on investing in mortgage servicing rights. The industry’s, size, complexity, and most importantly, its sophistication, has all grown tremendously since then. Originating and servicing residential mortgage loans is an important activity for many credit unions. Many of them already service loans that have been sold to investors. The time has indeed come for NCUA to permit federal credit unions to purchase mortgage servicing rights from other federally insured credit unions. The ability to do this will provide flexibility for federal credit unions to manage their mortgage servicing lines of business and create liquidity in the credit union system while also providing a more diverse business and investment opportunity for purchasers of mortgage servicing rights. This proposed rule can benefit both sellers and purchasers of mortgage servicing rights.
Today’s final rule removes the prohibition on federal credit unions from purchasing mortgage servicing rights in the investment rule. As of June 2021, federally insured credit unions collectively sold and serviced $270 billion of mortgage real estate loans, with federal credit unions accounting for 53 percent of the total balance. Comparatively, approximately 1,100 federally insured credit unions collectively sold $63 billion in residential mortgage loans in 2019, with 556 federal credit unions accounting for $39 billion of the total amount sold.
If a credit union wants to purchase mortgage servicing rights from another credit union, I am glad today’s rule allows the institutions we regulate to keep this capital in the credit union system. I believe today’s rule does not increase the risk for the National Credit Union Share Insurance Fund while also improving price transparency for MSRs. I view it as a win-win and enthusiastically support today’s rule.
Thank you, Mr. Chairman, I have no questions.