Effective immediately, Ginnie Mae is increasing the base net worth requirement for HECM Mortgage-Backed Securities (HMBS) issuers from the current $1 million base net worth requirement to $5 million.
Ginnie Mae is also instituting a new liquid asset threshold equal to 20 percent of the net worth requirement. “The new liquid asset requirement will help to ensure funds are available when there is a need for cash to fund borrower advances, loan buyouts, and/or to pay for potential indemnification requests from insuring agencies,” in an announcement from Ginnie Mae President Theodore Tozer published on January 7.
Existing Issuers will have until October 1, 2011, to meet the new net worth and liquid asset requirements.
“Ginnie Mae is changing the financial requirements for institutions participating in the HMBS Program, in order to ensure that its program requirements align with the rapidly changing housing finance market,” adds Tozer.