Ginnie Mae has announced several new requirements in response to the continued transformation of the housing market and the growing number of entities that are granted Issuer approval, yet fail to actively participate in a Ginnie Mae MBS program. In the new year, Ginnie Mae will (1) adjust its financial requirements for Single-Family Issuers and Issuers Approved for more than one Program and (2) require Issuers approved for a Ginnie Mae MBS program to demonstrate active participation in such program. The specific details of each updated requirement, as well as an explanation of the effective date for each such requirement, are detailed below.

Adjusted Net Worth and Liquid Asset Requirements for Single-Family Issuers and Issuers Approved for More Than One Program

Ginnie Mae has revised its Issuer financial requirements to increase its minimum adjusted net worth and liquid asset requirements for Single-Family Issuers and Issuers participating in more than one Mortgage-Backed Securities program. As of the effective dates below, the aforementioned Issuers must meet the following minimum net worth and liquid asset requirements:

• Single-Family Issuers:
  •  Must maintain a minimum net worth of $2,500,000 plus 0.35% (35 basis points) of the Issuer's total effective outstanding Single-Family obligations. This requirement has been increased from $2,500,000 plus 0.20% (20 basis points) of the Issuer's total effective outstanding Single-Family obligations.
  • Must hold minimum liquid assets of the greater of $1,000,000 or 0.10% (10 basis points) of the Issuer's outstanding Single-Family securities. This has been changed from the current requirement that Single-Family Issuers hold minimum liquid assets of 20% of their required net worth.
• Issuers Approved for more than one Program:
  • Issuers approved to participate in more than one program type (Single-Family, Multifamily, Manufactured Home, and/or HECM MBS) will have to meet minimum adjusted net worth and liquidity requirements equal to or greater than the sum of the minimum requirements for all the program types in which the Issuer is approved to participate, as opposed to thecurrent requirement that such Issuers meet the highest program requirement.

The adjusted minimum net worth and liquid asset requirements described above will take effect on the following dates:

• Applicants seeking Issuer approval will be required to meet the new requirements by January 1, 2015.
• Issuers approved on or before December 31, 2014 will be required to meet the new requirements beginning December 31, 2015.
• In order for a mortgage-servicing rights (MSRs) bulk transfer, or “a transfer of Issuer responsibilities,” to be approved by Ginnie Mae, the acquiring Issuer will have to meet the new requirements by January 1, 2015.
• In order for a new Pool Issuance for Immediate Transfer (PIIT), or MSR bulk transfer, arrangement to be approved by Ginnie Mae, the acquiring Issuer will have to meet the new requirements by January 1, 2015.

Please be advised that, notwithstanding the foregoing changes for Single-Family Issuers and Issuers Approved for more than one Program, any applicable specific net worth, liquidity and institution-wide capital requirements currently in place for the Multifamily, Manufactured Home, and HECM MBS programs remain unchanged. Ginnie Mae plans to include the aforementioned requirements in its Mortgage-Backed Securities Guide on January 1, 2015.

Demonstrated Participation Requirements for Issuers Approved for a Ginnie Mae MBS Program

As mentioned above, Ginnie Mae has experienced an increase in the number of entities that are granted Issuer approval to participate in a Ginnie Mae MBS program, yet fail to actively participate in the Program. In response, Ginnie Mae has announced that it will require Issuers approved for such Programs to demonstrate to Ginnie Mae that they have actively participated in issuing, acquiring issuer responsibility for, or subservicing Ginnie Mae MBS shortly after approval, and continue to do so for as long as they maintain an approved status in their respective program(s). The purpose of such a requirement is to ensure that approved-Issuers maintain the operational capacity to participate in the program(s) that they are approved for. Such operational capacity is a key component for approval, and long-term lack of participation may be indicative that Issuers approved for a Ginnie Mae MBS Program may no longer possess the operational capacity that was a basis for approval.

Accordingly, effective January 1, 2015, all approved Issuers must have demonstrated participation by issuing, acquiring, or subservicing Ginnie Mae MBS in the Ginnie Mae MBS program(s) for which they are approved in the preceding 18 months, and Issuers approved after July 1, 2013 must demonstrate participation within 18 months of their approval date. Issuers failing to meet the aforementioned requirement will be considered "inactive Issuers." Inactive Issuers may either voluntarily withdraw from the program, or request an extension of time in order to comply with the requirement. Ginnie Mae will review the circumstances surrounding each such request and, in its sole discretion, determine whether the inactive Issuer will be involuntarily withdrawn, or, alternatively, granted an extension for a reasonable amount of time in order to comply based on the particular facts and circumstances.

Notwithstanding the foregoing, inactive Issuers that have withdrawn - either voluntarily or involuntarily - are eligible to re-apply for program approval through the normal approval process. Additionally, Issuers that are State Housing Finance agencies or are serving as Participation Agents for HMBS securities reporting are exempt from this demonstrated participation requirement.