Ginnie Mae Finalizes New Issuer Requirements

Ginnie Mae announced several new issuer requirements Monday, as well a new issuer scorecard as part of the organization’s larger strategic effort to manage risk and resources in the mortgage market.

The new issuer requirements and policies have been in the works since Chief for the Department of Housing and Urban Development, Secretary Julián Castro was sworn in earlier this year. The HUD chief is tasked with driving the housing market forward on the heels of uneven recovery, among other initiatives.

New net worth requirements will apply to forward issuers, but remain unchanged for HECM-backed mortgage securities (HMBS) issuers, though issuers will have to adhere to Demonstrated Participation Requirements.

The new Issuer Operation Performance Profile (IOPP), or scoreboard, aims to clarify Ginnie Mae regulations and provide a framework and methodology from which issuers can gauge their effectiveness against a pre-determined set of Ginnie Mae expectations (metrics) as well as how they rank against their peers.

“The market is changing rapidly in terms of the types of Issuers and counterparties that Ginnie Mae is dealing with,” says Ginnie Mae President Ted Tozer in a written statement. “We have an obligation to be diligent in monitoring risk and ensure that our Issuers are successful. But we also want to attract global capital into the mortgage market and ensure that our model is flexible and available and able to attract capital into the market, which will provide access to credit to all qualified borrowers.

New issuer net worth and liquidity requirements will adjust the minimum adjusted net worth and liquid asset requirements for Single-Family Issuers and Issuers participating in more than one MBS program.

Applicants seeking Issuer approval will be required to meet these new requirements beginning on January 1, 2015, and additional new requirement effective dates are included in the new policies.

Previously, Castro and Tozer unveiled ongoing initiatives including “An Era of Transformation;” a position paper outlining the major issues impacting mortgage lending following the financial crisis, and how Ginnie Mae will approach them.

“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,” Tozer says. “These new requirements, along with the expertise of our staff, will ensure the success of our Issuers, allow Ginnie Mae to continue protecting American taxpayers from market volatility, while attracting capital into the mortgage market and providing further stability to the U.S. housing industry.”

A memo from Ginnie Mae about the new issuer net worth and liquidity requirements can be accessed here, and a memo about the new demonstrated participation requirement can be accessed here.

Written by Cassandra Dowell

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