Nevada Government Relations Rally (GRR) meeting script:
Introductions (2 minutes)
Team leaders should introduce themselves first and then call on others to introduce. Introductions should include your name, title, credit union, field of membership, and Project Zip Code (PZC) numbers.
Team leaders should then move on to the first topic.
‘Credit Union 101’ (2 minutes)
It has been a few years since we were able to have our lobby day in person in Carson City, so we would like to take this opportunity for a quick refresher on credit unions.
Credit unions are not-for-profit, member-owned financial cooperatives that exist solely to serve their members. This member-owner structure ensures that profits made by the credit union stay local and go back to their members within their communities rather than shareholders.
Credit unions offer a majority of the same services as other financial institutions, but it is the unique cooperative member-owner structure that sets credit unions apart from others.
We are proud to serve ________ Nevadans (use your credit union’s latest membership number).
The Nevada Credit Union League (NCUL) does not have a specific bill “ask” at this time, but we wanted to take a few minutes to discuss two items.
The first item is an issue that has come up in the past: legislation that includes a super-priority lien.
The second topic is the rise in interest rates and the impact it’s had on local housing affordability.
Super Priority Lien Legislation (5 minutes)
The first topic we would like to discuss is super-priority lien status legislation.
A super-priority lien is just what it sounds like — the lien that has the first priority on a property.
Normally a lender (such as a credit union) has the first lien. In the unfortunate situation a property must be foreclosed on, the credit union can work with the borrower to try to keep the borrower in the home — or in extreme cases, the credit union can recoup its collateral if the borrower cannot resume making payments.
Over the past couple of sessions, bills have been introduced that would include a super-priority lien as a way to enforce fines or ensure payments.
Just last session, a well-intended bill (Senate Bill 57) would have allowed counties to foreclosure on a property if the owner did not pay a fine for hosting parties. Fortunately, this bill was stopped.
This type of approach is problematic not only from the lender’s perspective of losing its first-lien status, but it also can impact the secondary mortgage market where many loans are bought and sold. Additionally, it can impact the prospects of a homeowner trying to sell a house.
Another example of super-priority legislation is the residential PACE program. PACE stands for Property Assessed Clean Energy and has become popular in many states.
The goal of the program is laudable: clean energy. However, it achieves this goal by financing residential energy improvements (and pays them through) the homeowner’s tax bill. These loans typically have priority lien status.
Fannie Mae issued guidance in 2020 that it will not purchase mortgage loans secured by properties with an outstanding PACE loanunless the terms of the PACE loan program do not provide for lien priority over first-mortgage liens.
If any pieces of legislation contain a super priority lien, we ask that you consider the ramifications for the homeowner and the lender — and please vote “no.”
Impact of Interest Rates on Housing Affordability (5 Minutes)
The final topic we’d like to discuss has been making a great deal of news headlines: the rapid rise in interest rates over the past year.
As you are probably well aware, rates for mortgages have risen significantly while prices have remained fairly stagnant. The good news is that home prices have not continued to skyrocket. The bad news is that over the past year, the amount of home that local residents can afford has decreased due to the rise in rates.
One year ago, the average interest rate on a mortgage for credit unions in Nevada was 4.16 percent. Today, that rate is approximately 6 percent.
To illustrate how this has impacted a Nevadan looking for a home, we can look at the average home price in Nevada, which is $433,100 according to Zillow. Applying current rates and assuming a 30-year fixed mortgage, the average monthly payment went up nearly $500 — from $2,107 to $2,602.
This extra $500 is a big number when it comes to a monthly mortgage payment.
Numerous factors drive mortgage rates, so this increase cannot solely be attributed to the Federal Reserve recently transitioning its “quantitative easing” program to “quantitative tightening” on long-term interest rates within the financial and mortgage markets. Regardless of what is driving up rates, one thing is clear: It is impacting people’s ability to afford a home.
If applicable, please share examples of what your credit union is doing to help members with housing affordability, such as first-time homebuyer/down payment assistance programs, creative lending products, homebuyer education, or anything else.
We ask that if any housing affordability legislation is introduced this session, or if there are any stakeholder discussions, please consider including credit unions in the conversation. As trusted community lenders, we would like to be a part of the solution and help support efforts by the state of Nevada to increase housing affordability programs.
Conclusion (1 Minute)
Thank you very much for listening to the issues impacting credit unions and credit union members across the state. We have complied a leave-behind document with some general information and figures on credit unions in Nevada.
If there is time left: What are some of credit unions’ top legislative priorities for the year? Offer to be a resource for legislators for either their legislation or if they hear of any legislation that they feel will impact credit unions.
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