The Government National Mortgage Association has finalized plans to increase the minimum net worth requirement on its MBS issuers to $2.5 million, from $1 million.
Issuers of Ginnie Mae guaranteed mortgage-backed securities also must meet new liquidity and minimum capital standards under requirements that become operative October 1, 2011.
But the new requirements are effective immediately for any lenders applying to be a new Ginnie Mae issuer.
"Ginnie Mae is changing the financial requirements for participants in its single-family program in order to ensure that its program requirements align with the rapidly changing housing market," the agency says in a memorandum to its issuers.
Banks and thrifts must be "well capitalized" under federal bank regulations and non-bank issuers must have a 6% equity-to-asset ratio, according to the memo.
In addition, 20% of the $2.5 million net worth requirement must consist of liquid assets to "ensure funds are available," the agency says, for loan buybacks and indemnification requests from the insuring agencies: the Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Services.
Ginnie Mae president Theodore Tozer unveiled his plan to hike the financial eligibility requirements for issuers a few months ago.
"By imposing these important requirements, Ginnie Mae is committed to prudently managing risk, while furthering its mission to ensure the 30-year, fixed-rate mortgage is possible for millions of families no matter the market condition," Tozer said in August.
Ginnie Mae issuers securitized $413 billion in government guaranteed residential mortgages in fiscal year 2010, which ended September 30.
