The agency seeks further comments and feedback from mortgage industry names
The Federal Housing Finance Agency (FHFA) has re-proposed, and is seeking additional comments on, its minimum financial eligibility requirements for Fannie Mae and Freddie Mac seller/servicers.
The proposed changes from the existing standards established in 2015 involve differentiating between the servicing risks of the government-sponsored enterprises and Ginnie Mae. The FHFA also suggested increasing the required capital ratio for nonbank sellers/servicers from 6% to 9%.
In a statement, the agency said the move will “strengthen, and provide transparency and consistency of, required capital and liquidity for seller/servicers with different business models.”
“In an ongoing commitment to the safety and soundness of our housing finance system, the enterprises must consider risk exposure from their contractual relationships with seller/servicers and assess, monitor, and take appropriate actions to address the risks to which they are exposed in their business relationships with third parties,” said FHFA acting director Sandra Thompson.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said they are especially pleased that the FHFA considered industry comments when drafting the proposal.
“This is a critically important framework to get right given the vital role independent mortgage banks (IMBs) play in serving the needs of LMI and minority borrowers. Given the focus of this administration on expanding homeownership to underserved borrowers, it is important that the capital, liquidity, and net worth standards are properly calibrated to mitigate risk, but not excessive to the point where they will increase costs or reduce access for borrowers,” Broeksmit said.
Industry participants have 60 days to provide feedback. The FHFA said it expects to finalize them in the second quarter, and most of the requirements will be effective six months after they are finalized. Some requirements, however, will be phased in over longer periods of time.