Mortgage lenders that participate in programs from the Government National Mortgage Association will soon be subject to new net worth requirements. One of the objectives of the updates is to ensure issuers have enough capital to cover repurchases and indemnifications.
In February, Ginnie Mae issued a bulletin indicating that existing issuers of mortgage-backed securities and HMBS 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 week, the government-owned corporation issued bulletin APM 10-17 indicating that all participants in its single-family program would be subject to new financial requirements.
Among the new requirements is a minimum base net worth of $2.5 million, up from $1 million.
Ginnie is also revising its additional net worth requirement to 0.2 percent of the remaining principal balance and 0.2 percent the amount of available commitment authority.
Participants are currently required to maintain 1 percent of the remaining principal balance, 1 percent of the available commitment authority between $5 million and $20 million, and 0.2 percent of the amount above $20 million.
The updated requirements immediately apply to new issuers, while existing issuers will have until Oct. 1, 2011, to comply.
Ginnie said its liquid asset requirements are being raised to 20 percent of Ginnie’s net worth requirement.
“The new liquid asset requirement will help to ensure funds are available when there is a need for cash to fund loan buyouts and/or to pay for potential indemnification requests from insuring agencies,” the bulletin stated.
That change impacts all single-family issuers as of Oct. 1, 2011.
Finally, non-banks and credit unions will be subject to institution-wide capital requirements of 6 percent of total equity/total assets
For banks and thrifts, the institution-wide requirements are 5 percent of tier-1 capital/total assets; 6 percent of tier-1 capital/risk-based assets; and 10 percent of total capital/risk-based assets.
Single-family issuers will be subject to the new minimums as of Oct. 1, 2011.
The Washington, D.C.-based company said the revisions were made “in order to ensure that its program requirements align with the rapidly changing housing finance market.”
