WASHINGTON While housing finance reform legislation remains stalled, a group of small mortgage lenders is urging the Treasury Department to start setting aside a portion of Fannie Mae and Freddie Mac's profits so there will be enough funds to capitalize a new cash window in the future.
In a letter to Treasury Secretary Jack Lew, the Community Home Lenders Association said it is worried about the fact that the government-sponsored enterprises' profits are being swept into Treasury.
"CHLA is becoming increasingly concerned about the availability of a source of capitalization funds," wrote the group in a letter dated Thursday. Capital will be needed to establish an "independent mutual cooperative to serve small lender cash window needs."
In 2014, the Senate Banking Committee approved a reform bill that would have dismantled Fannie and Freddie and their cash windows. The bill did not have sufficient support to make it to the Senate floor.
Recognizing that small lenders depend on the GSEs' cash window to sell their loans, the Senate bill called on Fannie and Freddie to provide the initial capitalization for a new cash window.
While the legislation is effectively dead, CHLA wants Treasury to start setting aside some of the GSEs' profits in a capitalization reserve account.
"It is simply an interim step to provide the needed flexibility in the future to access the funds needed to capitalize an effective cash window."