Mortgage companies that want to continue doing business with Fannie Mae and Freddie Mac will soon have to comply with new operational and financial requirements.
The Federal Housing Finance Agency issued a statement Wednesday indicating that new seller-servicer eligibility requirements have been issued by the pair of secondary lenders.
The minimum net worth for seller-servicers under the new requirements is $2.5 million. In addition, another 25 basis points of the unpaid principal balance of one-to-four-unit residential loans serviced will be required.
All non-depository seller-servicers will need tangible net worth divided by total assets to equal or exceed 6 percent. Depository institutions can just comply with their respective bank regulators.
In addition, non-depository seller-servicers will need minimal liquidity of 3.5 BPS on their total agency servicing plus an incremental 200 BPS on the unpaid principal balance of total non-performing agency servicing that exceeds 6 percent of total agency servicing.
In addition to cash and cash equivalents, available liquidity can include
agency mortgage-backed securities, GSE obligations or U.S. Treasury obligations that are either available for sale or held for trading. Also acceptable is the unused or available portion of committed single-family servicing advance lines.
Fannie Mae
Senior Vice President for Credit Portfolio Management Joy Cianci explained in a statement from the Washington-based company that it will work closely with servicers to ensure they clearly understand the requirements and continue to be strong counter-parties.
Freddie Mac Executive Vice President of Single Family Business Dave Lowman issued a statement indicating that the new eligibility standards
incorporate lessons from the housing crisis, reflect the expanding role of non-bank servicers and will improve the customer experience for investors and borrowers alike.
“These updated operational and financial requirements will help mitigate risks associated with changes in the servicing industry,” FHFA Director Melvin L. Watt said in a statement from the regulator-conservator. “Strengthened enterprise servicer counterparty standards should also improve access to credit and protect taxpayers by reducing market uncertainty about the enterprises’ expectations for mortgage servicer counterparties.”
Revisions to operational requirements become effective on Sept. 1 at Fannie and on Aug. 18 at Freddie.
Sellers and servicers have until Dec. 31 to meet financial requirements.
