Washington Watch

Bush Rejects Liquidity Bid for Mortgage MarketWASHINGTON–President Bush rejected a request by Fannie Mae to prop up the imploding mortgage market by increasing the amount of mortgages the secondary market giant is allowed to buy.The president said the administration will not increase mortgage limits on Fannie and its sister secondary market company Freddie Mac until impending reforms are enacted by Congress. First things first when it comes to those institutions, said the President. Congress needs to get them reformed; get them streamlined. Get them focused, and then I will consider other options.But reform of the secondary market, in the way of legislation to set new oversight of Fannie, Freddie and the 12 Federal Home Loan Banks, is not expected to come any time soon, and may even be dead because of the ongoing crisis in the market the so-called government sponsored enterprises were chartered to facilitate.Bush was responding to a request by Fannie Mae CEO Daniel Mudd to regulators with the Office of Federal Housing Enterprise Oversight to increase the limits on mortgages bought by the two companies–currently at $1.4 trillion–in order to pump liquidity to the stumbling mortgage market. Mudd’s request was joined by Democratic leaders, including senators Christopher Dodd and Charles Schumer and members of the House Financial Services Committee, all of whom have been involved in the efforts to reform the GSEs and the secondary market.The proposal was greeted with enthusiasm by the OFHEO and the Department of Housing and Urban Development, but officials in the two agencies abruptly reversed course after the President made his position public.Opportunities Seen in Imploding Mortgage MarketsBALTIMORE–Credit union representatives were confident that the ongoing crisis in the subprime mortgage market will spare them and some even see it as an opportunity.Marhuerite Lauderdale, vice president of mortgage lending at Washington State Employees CU, said while attending the African American CU Coalition’s annual conference. The opportunity is for credit unions to offer relief from some of the exploding ARMs borrowed elsewhere. “We’re trying to get people to refinance out of those funky ARMs,” said Lauderdale. The credit union has several products that may help those distressed borrowers, such as flat-fee mortgages or those with no private mortgage insurance requirements, she said.Bert Hash, president of Maryland Employees CU, said his credit union has been able to keep a steady beat despite the ongoing crisis in the mortgage market. “We’re refinancing some of the people who have been in subprime loans. It’s keeping our volume of (mortgage) loans pretty much as it has been all along,” said Hash. Most of those distressed borrowers are refinancing into long-term fixed-rate products.Credit Unions Approach Goal for Martin Luther King Memorial DonationsBALTIMORE–The credit union community is approaching $1 million in pledges to support the new memorial to Martin Luther King Jr., with more than $900,000 promised to help build the statute on the National Mall in Washington.“Our goal is $2 million and we expect to reach that next year,” said Hubert Hoosman Jr., president of Vantage CU in St. Louis, and treasurer of the African-American CU Coalition. The credit union gift will earn the movement a citation on the wall of the planned memorial, the first to recognize donors.More than 65 credit unions, as well as CUNA, NAFCU, CUNA Mutual Group, leagues and other vendors have pledged contributions to the new memorial.The King Memorial will be located on the National Mall on the Tidal Basin, adjacent to the FDR Memorial, and in a direct line between the Lincoln and Jefferson memorials. The site is also near the location of King's famous "I Have a Dream" speech, which took place more than 40 years ago. The memorial's design will honor King's life and work. Quotations from King's writing, sermons and speeches will be engraved on to the Memorial Wall. President Clinton signed a Joint Congressional Resolution in 1998 to create a four-acre memorial that will be the first on the National Mall to honor a person of color. The total cost of the memorial will be $100 million, and is expected to be completed by winter 2008.