Ginnie Mae on Thursday announced a set of revised capital requirements that appear to be aimed at cutting red tape for federally insured credit unions and housing finance agencies.
The all-participant memorandum will align Ginnie’s standards with other regulatory requirements that credit unions must already meet and exempt housing finance agencies due to their state-backed status, according to a press release issued by the federal mortgage bond insurer. The memorandum, which comes into effect on December 31, also largely confirms the broader existing standards for counterparties with additional clarification: that Ginnie Mae loans eligible for redemption are excluded from the requirements related to the calculation of total assets used. to determine leverage ratios. Ginnie Mae counterparties are currently required to meet a minimum leverage ratio of 6%.
“These changes to our institution-wide capital requirements accomplish two things – they bring our program requirements in line with standards applied by other federal entities, and they better reflect the unique financial status of state housing agencies,” Ginnie Mae President Alanna McCargo said in the statement. . “It’s important because credit unions and public housing finance agencies play a critical role in supporting community lending, especially in underserved areas.”
The move is in line with McCargo’s previously declared interest to strike a balance between the need to manage counterparty risk and to provide Community lenders with sufficient support to enable wider consumer access to credit. Ginnie Mae’s role is to ensure that payments from securitized mortgages that other federal entities return to loan level reach bond investors. This is increasingly dependent on non-bank counterparties to distribute these cash flows.
“To me, that feels like a fit. The fact that HFAs are entities with access to government funding sources, that’s important to consider when thinking about it from a capital perspective,” said said David Battany, executive vice president of capital markets at Guild. Mortgage. “Clarifying that credit unions are regulated entities like banks also makes sense.”
But Battany and other experts from mortgage companies and trade groups contacted on Friday generally said their views on APM were preliminary, pending further study of its details. Some hoped that meant Ginnie had backed off controversial proposal that would tighten non-bank capital requirements, but most thought it unlikely.
“Previously they were talking about establishing a new risk-based capital requirement for [independent mortgage banks.] It was a huge problem for us, and I’m trying to figure out if that means they’re not going to do it,” said Scott Olson, executive director of the Community Home Lenders Association.
The changes announced Thursday do not affect existing capital requirements for non-custodians or the previous proposal, which McCargo said it would go ahead with during a listening session in April, according to emails that the press office of the Ministry of Housing and Urban Development sent in response. to the requests of this publication.