New Financial Rule Set by Fannie Mae and Freddie Mac


The Federal Housing Finance Agency stated Wednesday that Fannie Mae and Freddie Mac are issuing new operational and financial requirements for all sellers and servicers who work with the GSEs.

In January of this year Fannie and Freddy divulged its proposal for minimum financial requirements for servicers and mortgage sellers who work with government sponsored enterprises. Now the proposal is coming into effect.

In this new rule, all servicers and sellers will need a minimum net worth base of $2.5 million in addition to 25 basis points “of the total unpaid principal balance for the loans each nonbank services,” according to HousingWire. Nonbanks will need to sustain a minimum capital ratio of “tangible net worth greater than or equal to 6 percent of the nonbank’s total assets.”

“These updated operational and financial requirements will help mitigate risks associated with changes in the servicing industry,” FHFA Director Mel Watt said of the new rules. “Strengthened enterprise servicer counterparty standards should also improve access to credit and protect taxpayers by reducing market uncertainty about the enterprises’ expectations for mortgage servicer counterparties.”

For banks, servicers and sellers need to sustain a minimum net worth of $2.5 million and a dollar amount equal to 25 basis points of the not yet paid principal balance of mortgages secured by one to four unit residential properties that it services directly, even if the mortgages are owned by the servicer or by a third-party investor.

Joy Cianci, senior vice president for credit portfolio management at Fannie Mae, stated that Fannie will “work closely with servicers to make sure they have a clear understanding of the requirements and continue to be strong counterparties for Fannie Mae.” She went on to say that Fannie Mae servicers and sellers need to implement the requirements by Sep. 1 of this year and financial eligibility changes by Dec. 31 of this year.

Dave Lowman, the executive vice president of single-family business at Freddie Mac, stated the rules identify the growing position of nonbanks in the trade.

“The new seller/servicer eligibility standards announced today incorporate the lessons of the recent housing crisis and reflect the expanding role of non-bank servicers in the mortgage industry,” Lowman said.

“These new standards are intended to improve the customer experience for borrowers and mortgage investors alike by establishing common-sense servicing benchmarks for operational efficiency and financial strength,” Lowman continued. “Today’s announcement underscores Freddie Mac’s  commitment to work with the Federal Housing Finance Agency and other stakeholders to continually improve America’s mortgage finance system.”


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