Democrats and Republicans in Congress, as well as President Obama's administration, agree the GSEs must be reformed post-conservatorship. However, the parties disagree on what should be done.

Obama has said he wants the government to have continued involvement in the housing market, at a minimum providing borrowing assistance to low-income applicants.

House Republicans, however, have been pushing for a privatization of the housing market ever since they gained control of the House in 2011. Rep. Jeb Hensarling (R-Texas), Financial Services Committee chairman, introduced bills in 2011 and 2010 that would privatize Fannie and Freddie within two years, immediately raise fees and cap the GSEs' portfolios.

NAFCU Vice President of Legislative Affairs Brad Thaler sent a letter to Rep. Scott Garrett (R-N.J.) and Rep. Carolyn Maloney (D-N.Y.), the respective chair and ranking member on the subcommittee, which urges the leaders to retain a system that provides credit unions with continued access to the secondary market and the liquidity it provides.

He listed 10 “core principles” that would ensure credit unions be treated fairly during the reform process, including explicit guarantees on the payment of principal and interest on mortgage backed securities issued by the GSEs.

“The explicit guarantee will provide certainty to the market, especially for investors who will need to be enticed to invest in the MBSs and facilitate the flow of liquidity,” Thaler said.

A GSE model based on a cooperative or mutual entity was another NAFCU suggestion. Each GSE would have an elected board of directors, be regulated by the Federal Housing Finance Agency, and be required to meet strong capital standards, Thaler offered.

Although the trade said the GSEs should be self-funded, NAFCU also stressed that it does not support full privatization of the GSEs because of serious concerns that small, community-based financial institutions could be shut-out from the secondary market.