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ABA feedback on FHFA’s re-proposed eligibility requirements for enterprise single-family vendor/servicers

In a letter last week to the Federal Housing Finance Company, the American Bankers Affiliation commented on the re-proposed update to requirements that mortgage lenders must meet to promote loans to or service loans on behalf of Fannie Mae and Freddie Mac. The replace additionally consists of necessities for servicing Ginnie Mae mortgages.

To make sure long-term stability of the enterprises and the housing market, “it’s essential to guage the adequacy of the online price and capital ratio necessities for non-depository vendor/servicers,” ABA wrote. “Whereas many nonbank mortgage servicers could have began as specialty/default servicers, they now function with comparable enterprise fashions as giant, bank-owned mortgage originator/servicers—however with out the strict regulatory regime that governs depositories.”

Beneath the proposal, sellers and servicers could be required to take care of a base internet price of $2.5 million plus 35 foundation factors of the unpaid principal steadiness for Ginnie Mae servicing and 25 foundation factors of the unpaid principal steadiness for all different 1-to-4-family loans serviced. Depository establishments would proceed to depend on their prudential regulatory requirements to satisfy the GSEs’ capital and liquidity necessities. The proposal consists of suggestions from a January 2020 proposal, as nicely classes from the pandemic.

ABA beneficial that up to date eligibility requirements for nonbank mortgage servicers needs to be imposed with “affordable phase-in durations” to provide establishments time to adjust to enhanced capital and liquidity reserves. “ABA believes it’s acceptable that these requirements are strengthened, however the coverage goal is, and will stay, to boost systemic security and soundness, to not inadvertently power companies to finish participation for incapability to conform.”

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