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More Net Worth Revisions at Ginnie

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Mortgage Daily

                                                 November 30, 2010

Additional revisions to net worth requirements have been issued by Ginnie Mae. The latest updates impact issuers of multifamily mortgage-backed securities.

In February, the government-owned corporation issued a bulletin indicating that existing MBS issuers and HMBS issuers would be subject to a $1 million net worth requirement as of Oct. 1. New issuers were subject to the increased requirements back in October 2008.

Last month, Ginnie issued a bulletin indicating that all participants in its single-family program would be subject to new financial requirements — including a minimum base net worth of $2.5 million, up from $1 million.

On Monday, the Washington, D.C.-based firm issued Memorandum APM 10-22 outlining new net worth requirements for multifamily issuers.

The minimum base net worth is being raised to $1 million from $500,000.

Ginnie is additionally changing its net worth calculation. The existing calculation is based on 0.2 percent of remaining principal balances plus available commitment authority and unexpended construction loan draws greater than $35 million.

Under the revised requirement, net worth will be based on 1 percent of remaining principal balance plus available commitment authority and unexpended “construction loan draws in excess of $25 million, but less than $175 million, plus an additional 0.2 percent of remaining principal balance, available commitment authority and unexpended construction loan draws greater than $175 million.”

The revised requirements impact all new multifamily issuers. Existing multifamily issuers have until May 1, 2011, to comply.

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