Last week Ginnie Mae announced that due to “recent industry and market conditions," they are raising the bar for issuers of its mortgage-backed securities. In a memo issued to lenders last Friday, Michael J. Frenz, executive vice president of Ginnie Mae said that by Oct. 1, 2010, all issuers of its single-family securities must have net worth of at least $1 million. The new requirement is quadruple the current requirement for most single-family issuers and double that for securitizers of reverse mortgages.
Frenz also said that all new issuers will be subject to a one-year probationary period, starting on first issuance or upon the acquisition of a Ginnie Mae servicing portfolio. “During this time, Ginnie Mae will closely evaluate performance metrics, including, but not limited to loan level insurance statistics, delinquency levels and early payment defaults,” he said. “Delinquencies and insurance rates must remain beneath our established thresholds.”
Ginnie Mae will also conduct an onsite review six months into the probation period, and any new issuer would be required to clear any deficiencies identified by the end of the twelve-month period.
According to Ginnie April issuance of Ginnie mortgage-backed securities nearly tripled from a year earlier, to $19 billion, the biggest monthly total since September 2003. To read a copy of the memo click the link below.