ABA Supports Changes to Eligibility Requirements for Single Family MBS Issuers

The American Bankers Association today wrote to Ginnie Mae in response to a recent request for input on eligibility requirements for single-family mortgage-backed securities issuers. Ginnie Mae issued the RFI as it prepares to augment liquidity and risk-based capital requirements for MBS issuers to help ensure the long-term financial stability of its programs and the housing finance system.

ABA expressed general agreement with two proposals that were put forth in the RFI. The first would seek to bolster net worth and liquidity standards for all Ginnie Mae issuers, including both banks and nonbanks, while the second—which applies to nonbanks—would introduce a minimum risk-based capital ratio for that segment. These new requirements would mostly affect nonbank issuers, since banks already meet the proposed liquidity and risk-based capital standards.

In the comment letter, ABA noted that the proposals would fortify the financial stability of the mortgage servicing segment, and level the competitive playing field between banks and nonbanks with regard to servicing operations. While ABA did not advocate in favor of any specific measure, the association urged Ginnie Mae to carefully consider the potential effects of the proposed new requirements and take a “measured approach” to their implementation.