Ginnie Mae ramps up scrutiny of nonbank mortgage lenders

Agency's exposure to sector has ballooned since 2008

TRD NATIONAL /
Jan.January 29, 2019 11:30 AM

(Credit: iStock)

Ginnie Mae, the agency that guarantees mortgages made by various government institutions, is taking unprecedented steps to address concerns over the role of nonbank lenders in U.S. housing markets.

For the first time in years, the agency has asked a number of these lenders to improve financial metrics before receiving full approval to continue issuing Ginnie-backed mortgage bonds. Maren Kasper, who became the agency’s acting head this month, declined to name the specific firms but noted they included both large and small lenders, and that they have been receiving short-term approvals in the meantime.

The agency has also conducted its first ever stress tests of business partners, to see how well their monthly cash-flow obligations would hold up under reduced loan production and increased delinquencies.

While 34 percent of securities issued by Ginnie Mae were serviced by nonbank lenders in 2014, that share has now increased to 61 percent. The agency’s outstanding issuance of mortgage bonds is now $2 trillion, a fivefold increase since the financial crisis.

A cooling housing market, with mortgage refinancing recently falling to its lowest level in 18 years, has raised concerns about nonbank lenders’ ability to meet their financial obligations since their balance sheets are smaller than traditional banks.

In the worst-case scenario, disorderly failures of these servicers could lead to losses that ultimately have to be paid for by taxpayers.

Though some in the industry argue that the strong post-crisis regulatory framework makes these challenges manageable, other observers note that the system has never been truly tested.

The largest nonbank lenders by mortgage-origination volume last year were: Quicken Loans Inc., PennyMac Loan Services LLC and United Wholesale Mortgage. [WSJ] — Kevin Sun


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Web searches for terms including “homes for sale” are way down up north. (Credit: Pixabay)

Fewer Canadians are searching for homes online amid pandemic

RCP CEO Richard O’Toole and Related CFO David Zussman (Credit: O’Toole via Westchester Magazine and Zussman via Related)

Related tries to calm Israeli investors after market panic

Clockwise from top left: California Gov. Gavin Newsom, Illinois Gov. J. B. Pritzker, New York Gov. Andrew Cuomo and Florida Gov. Ron DeSantis (Credit, in order: Justin Sullivan/Getty Images, Joshua Lott/Getty Images, Bennett Raglin/Getty Images, Joe Raedle/Getty Images) 

Real estate orgs call for appraisals to be deemed essential

Apollo Commercial Real Estate Finance CEO Stuart Rothstein and RedSky Capital principal Benjamin Bernstein (Credit: Apollo and ICSC)

Brooklyn development’s $150M loan falls into default

Massive stimulus package has limited upside for real estate

Massive stimulus package has limited upside for real estate

About 450 sellers pulled their listings last week (Credit: iStock)

As New York shut down, so did its resi market

arrow_forward_ios
Loading...