At the direction of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac yesterday announced new standards that mortgage institutions will have to meet in order to sell loans to or service loans on behalf of the housing GSEs. The new standards include net worth, capital and liquidity requirements both for depository institutions and for nonbanks.
The standards are largely unchanged from what was proposed by FHFA in January. By Dec. 15, sellers and servicers will be required to maintain a base net worth of $2.5 million plus 25 basis points of the unpaid principal balance for the total loans serviced — although Fannie and Freddie may extend or waive the requirements at their discretion.
Depository institutions may continue to rely on their prudential regulatory standards to meet the GSEs’ new capital and liquidity requirements. Nonbanks must maintain a capital ratio — tangible net worth divided by total assets — of at least 6 percent. For nonbanks, minimum liquidity is 3.5 basis points of their total agency servicing, with additional liquidity for non-performing GSE servicing assets.
ABA is generally supportive of the new standards, which will help to level the playing field between banks and nonbank competitors. The GSEs also announced new operational requirements that take effect on Sept. 1. For more information, contact ABA’s Joe Pigg.