The Ginnie Mae drama started a few weeks ago, when it issued a request for input on updates to its eligibility requirements for single-family MBS issuers.
The battle lines between those who think nonbanks need more regulation and those who think they already have adequate supervision is both deep and wide. We have opinion articles on our site today representing both viewpoints, ignited by recent Ginnie Mae actions:
The Ginnie Mae drama started a few weeks ago, when it issued a request for input on updates to its eligibility requirements for single-family MBS issuers. These updates concern:
Net Worth: The proposed change would add 25 bps of GSE outstanding obligation to the existing requirement.
Liquidity: The proposed change would add 5 bps of GSE outstanding obligations and 20 bps of total Held For Sale Loans.
Risk Based Capital Ratio: The proposed change adds a "Risk Based Capital Ratio" minimum requirement of 10%, which would apply only to nonbank issuers.
That last change is the most contentious, and it's the one that both our guest authors discuss.
"In an alarming move, Ginnie Mae has unleashed a plan that, if implemented, will significantly alter the mortgage markets and raise costs on loans that the majority of first-time homebuyers and minority homebuyers depend on," Stevens writes.
In contrast, Rossi holds that, "A lack of regulatory oversight into the operational processes used for loan origination and servicing of nonbanks is why Ginnie Mae's proposal is sorely needed to level the playing field in terms of financial viability requirements of issuers."
The heart of the issue is whether the current structure of nonbanks represents a risk to the country's financial stability (leaving aside another question on whether that structure gives them an unfair advantage). I know our readers have strong feelings on both sides so I'll go where angels fear to tread and ask for your feedback! Let me know what you think of Ginnie's proposed updates at swheeler@housingwire.com.
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