On August 17, 2022, the Federal Housing Finance Agency (FHFA) and Government National Mortgage Association (Ginnie Mae) issued joint announcement of updated minimum financial eligibility requirements for the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac—with Fannie Mae and Freddie Mac collectively referred to as the Enterprises) sellers and servicers and Ginnie Mae issuers.
The release provides updated capital, liquidity, and net worth requirements for both Enterprise sellers and servicers and Ginnie Mae issuers. Monitoring of compliance with minimum financial requirements remains crucial to the risk management processes of the Enterprises and Ginnie Mae. A seller and servicer or issuer must meet or exceed minimum financial requirements to receive or maintain their approved status.
The FHFA and Ginnie Mae worked in partnership on the release in an effort to align minimum financial eligibility requirements for sellers and servicers and issuers. The requirements primarily impact non-depository independent mortgage banks, while placing additional requirements on larger non-depository servicers or those with servicing portfolios in excess of $50 billion.
Highlights from the Release
The new release touches on the following.
Overall Alignment
- Enterprise tangible net worth and Ginnie Mae adjusted net worth requirements largely aligned
- Enterprise capital ratio and Ginnie Mae leverage ratio requirements aligned
- Enterprise and Ginnie Mae net worth, base liquidity, and origination liquidity requirements aligned
Updates
- Liquidity buffer, capital and liquidity plans, and third-party rating requirements limited to entities meeting the large non-depository definition
- Reduction in risk-based capital requirements from 10% to 6% authorized by Ginnie Mae
Effective Dates
Effectives date for most requirements is September 30, 2023, while certain others become effective as of December 31, 2023, or March 31, 2024.
Who Is Affected
Sellers and servicers approved by the Enterprise and Ginnie Mae issuers, or those currently seeking that approval are affected.
We’re Here to Help
For guidance on meeting minimum financial eligibility requirements, contact your Moss Adams professional. You can also visit our Mortgage Companies Practice page for additional resources.