Housing industry representatives react
Ginnie Mae and the Federal Housing Finance Agency (FHFA) have issued new capital eligibility requirements for seller/servicers and issuers.
Effective September 30, the updated requirements will allow Fannie Mae and Freddie Mac to institute requirements beyond the minimum for certain sellers/servicers who show evidence of heightened risk embedded in the business model or financial condition.
To be eligible for Ginnie Mae and GSE loans, issuers/servicers need a net worth base minimum of $2.5 million plus add-ons of 25 basis points for GSE servicing, 35bps for Ginnie product, and 25bps for private-label and other servicing loans. Tangible net worth or total assets must be greater than or equal to 6%.
The agencies are also aligned in allowing a significant portion of the unused committed agency servicing advance lines of credit to count toward base liquidity requirements – a move the Mortgage Bankers Association was pleased of.
“We appreciate FHFA and Ginnie Mae for their collaboration on this proposal, which reflects a significant amount of MBA’s feedback to the existing and previously-proposed rules,” MBA president and CEO Bob Broeksmit said. “In addition, the agencies significantly reduced and recalibrated the “origination liquidity” requirements to better reflect expected margin call risk.
“Importantly, FHFA and Ginnie Mae also extended the implementation timeline to provide servicers sufficient runway to adjust to the new requirements. Other proposed changes that MBA had supported during the comment phase were also preserved in the final rule, including eliminating the procyclical liquidity requirement for nonperforming loans and recognizing differences in remittance types. Finally, we appreciate that FHFA and Ginnie Mae will align most, although not all, of their standards. Additional analysis will be needed to fully assess the impact, and we will work with FHFA and Ginnie Mae to ensure the requirements are properly calibrated.”
Broeksmit added that these requirements play a substantial role in the financial planning and risk management practices of institutions that originate and service GSE- and Ginnie-backed loans.
“MBA has long acknowledged the importance of ensuring stability and resiliency in the mortgage sector while also noting the need for any such requirements to be tailored appropriately to the risks presented in the market,” he said.
US Department of Housing and Urban Development (HUD) Secretary Marcia Fudge applauded the changes: “The robust collaboration of Ginnie Mae president Alanna McCargo and FHFA director Sandra Thompson is a testament to their leadership and shared commitment to sustainable access to credit for American families. The action announced today will ensure that we continue to address the needs of underserved communities through easy, equitable and sustained access to mortgage credit.”
“The updated eligibility requirements represent an ongoing commitment to the safety and soundness of Fannie Mae and Freddie Mac by strengthening the capacity of seller/servicers to meet the financial responsibilities associated with doing business with the enterprises,” said FHFA director Sandra Thompson. “FHFA and Ginnie Mae’s effort to coordinate on financial eligibility requirements provides greater consistency for enterprise seller/servicers and Ginnie Mae issuers.”
“Ensuring that Ginnie Mae issuers can acquire financing during times of stress is critical to preserving access to credit for those borrowers who depend on Ginnie Mae and our insuring agency partners,” said Ginnie Mae president Alanna McCargo. “These enhanced requirements, the product of our historic collaboration with FHFA, will promote the resilience of our issuers and better enable them to operate throughout economic cycles.”