Ginnie Mae, in All Participants Memorandum 24-12, has announced that issuers who have a track record of managing their interest rate exposure through Mortgage Servicing Rights (MSRs) hedging and who meet prescribed eligibility requirements may qualify for Risk-Based Capital Ratio (RBCR) requirement relief.
To determine if it will grant risk-based capital relief, Ginnie Mae will review information submitted quarterly on the issuer’s Mortgage Banking Financial Reporting Form and calculate an MSR value adjustment, the percentage by which the issuer’s MSR values will be reduced for the purposes of calculating RBCR. The adjustment will be based on the issuer’s hedging efficacy (as defined in the APM) over the most recent 12 quarters. If issuers have not hedged in each of the last 12 quarters, Ginnie Mae will use the average of hedging performance where hedging results are available. The adjustment is strictly for compliance with RBCR; the issuer’s adjusted net worth will not be adjusted, subject to the following minimum eligibility requirements …
To be eligible for risk-based capital relief, issuers, at a minimum, must have hedged:
- At least one of the most recent four quarters, and
- At least four of the most recent 12 quarters.
“As we have said previously, Ginnie Mae will continue to look for ways to adjust our RBCR, where industry practice reflects demonstrable risk mitigation,” said Ginnie Mae Acting President Sam I. Valverde. “With RBCR set to go into effect at the end of the year, we are pleased to provide this relief for proven hedging strategies.”
In APM 22-09, Ginnie Mae announced the implementation of the RBCR requirements for institutions seeking approval as Ginnie Mae single-family Issuers (SF Applicants) and Ginnie Mae single-family Issuers (SF Issuers) that are non-depository mortgage companies.
Ginnie Mae recently announced that its mortgage-backed securities (MBS) portfolio outstanding grew to $2.64 trillion as of September 2024. Ginnie Mae also issued $45.2 billion in total MBS, resulting in a net portfolio growth of $16.2 billion. This issuance supports the financing of over 132,000 households, including more than 61,000 first-time homebuyers, and approximately 65% of issuances reflected new home purchases.
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