Further Tightening in Ginnie Issuer Requirements

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Just days after unveiling new minimum issuer volume requirements, the Government National Mortgage Association disclosed changes to other issuer requirements.

The Washington-based company last week advised issuers that they would be required to demonstrate participation within 18 months of their approval date.

The move is intended to reduce the waste of resources that are expended on companies that are granted issuer approval but fail to generate any issuances.

Now, the government-owned company is tightening its issuer requirements further.

In addition to a minimum net worth requirement of $2.5 million for single-family issuers, another 35 basis points of outstanding single-family obligations will be required in net worth, Ginnie Mae announced Monday from the Mortgage Bankers annual conference in Las Vegas. The variable requirement was raised from 20 BPS.

Issuers will be required to maintain $1 million in liquidity plus another 10 BPS on outstanding securities.

When an issuer is approved for more than one program, they will need to maintain the aggregate requirements of all the programs.

“Both the new issuer net worth and liquidity requirement and the demonstrated participation requirement support Ginnie Mae’s continued efforts to effectively monitor risk and appropriately evaluate the financial strength, performance and stability of issuers,” Ginnie Mae President Ted Tozer said in the announcement.

The liquidity requirements become effective for new issuer applicants on Jan. 1, 2015.

Issuers approved prior to that date will need to meet the new requirements by Dec. 31, 2015.

In the case where there is a new pool issuance for immediate transfer, a mortgage servicing rights flow transfer

Loan servicers that acquire mortgage servicing rights on loans guaranteed by Ginnie will also need to meet the financial requirements.

An issuer scorecard will rate operational management and delinquency management and compare performance against peers.

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Mortgage Daily Staff

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