Ginnie Mae announced it’s increasing net worth requirements for Single Family issuers for the second time in three months to ensure its requirements align with the rapidly changing housing finance market.
Ginnie Mae is increasing the current $1 million base net worth requirement to $2.5 million and changing the formula for calculating additional requirements above the base.
Previously, net worth requirements were calculated as $2.5 million plus one percent for mortgage-backed securities (MBS) outstanding principal balance between $5 and $20 million and 0.2 percent above $20 million will be phased in for all current single-family issuers.
Institutions seeking issuer approval will be required to meet the new minimum net worth requirements immediately, while existing issuers will have until October 1, 2011. Ginnie Mae’s liquid asset and institution-wide capital ratio requirements will remain the same as announced in August.
It’s not clear whether these changes apply to HMBS issuers and calls to Ginnie Mae were note returned at press time. Lenders have been waiting for the new requirements after approval of new HMBS issuers was suspended to review the risks associated with the program.