WASHINGTON The Federal Housing Finance Agency issued final minimum financial requirements Wednesday for servicers of the government-sponsored enterprises, including higher capital and liquidity standards.
The new rules "incorporate the lessons of the recent housing crisis and reflect the expanding role of nonbank servicers in the mortgage industry," said Dave Lowman, an executive vice president at Freddie Mac.
Under the new rules, all servicers, including banks, must have a minimum net worth requirement of $2.5 million, plus 25 basis points of the unpaid principal balance on one- to four-family loans serviced.
Nonbank servicers must have a tangible net worth to total assets of at least 6% to meet the minimum capital requirement. For liquidity, they must retain 3.5 basis points on total agency servicing unpaid principal balance, including Ginnie Mae servicing. Nonbank servicers also have to hold 2% against nonperforming loans greater than 6% of their portfolio.
Meeting these new net worth and liquidity will be critical for nonbanks that regularly sell and transfer servicing. The two GSEs will review compliance on a quarterly basis and will "assess whether both the transferor and the transferee servicers meet the minimum financial requirements as a result of the transaction," according to the GSEs.
These higher liquidity standards will likely increase the costs for nonbanks. But the GSEs said it should not have an impact on the value of their mortgage servicing rights.
"Fannie Mae carefully considered these impacts and believe the requirements are appropriate and provide the right balance between managing counterparty risks and encouraging investments in the servicing business," according to a Fannie Mae background paper in the form of Frequently Asked Questions.
Pete Mills, the senior vice president of residential policy and member services for the Mortgage Bankers Association, said the "immediate impact on current servicers should not be significantly disruptive."
"MBA, however, does remain concerned about the effects these changes could have long term, particularly on servicers' ability to grow in the future and the possible impact on MSR values," Mills said.