CHLA Releases Ginnie Mae Report

Report Calls for Balanced Supervision of Smaller IMB Issuers


Contact: Scott Olson                                                                  For Immediate Release            571-527-2601                                                                            January 24, 2019


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The Community Home Lenders Association (CHLA) today released a detailed report [enclosed] on the Government National Mortgage Association (Ginnie Mae).  The CHLA Report calls for balanced supervision of smaller Ginnie Mae issuers commensurate with their risk, and warns that tightening of policies towards such issuers could increase the concentration of issuers and undermine Ginnie Mae’s access to mortgage credit role.


The CHLA Report reiterates concerns it first raised in its December 2018 House Financial Services Committee testimony, that:


“CHLA members are increasingly becoming aware of reports of Ginnie Mae tightening actions being taken against smaller issuers, which clearly do not pose the same level of risk to Ginnie Mae that larger issuers do.


Reports include denying or significantly curtailing requests for commitment authority . . . and raising net worth and liquidity requirements above posted levels.”   


The CHLA Report addresses such concerns through a detailed analysis of Ginnie Mae and its financial performance and risk, including:


* Ginnie Mae’s statutory duty to facilitate access to mortgage credit,


* The role IMBs have played in the last decade in access to credit, including IMBs’ significant market share growth in FHA and Ginnie Mae,


* A detailed analysis of Ginnie Mae’s financial risks, which are limited,


* Ginnie Mae’s strong financial performance over last decade, and.


* Formal Ginnie Mae actions recently taken to enhance issuer supervision, which CHLA generally supports.


The CHLA Report makes a series of recommendations on how Ginnie Mae should meet its dual objectives of “meeting mortgage access to credit needs through a broad issuer base and addressing the risk of actual credit losses,” including:


* Ginnie Mae should not have an objective of reducing its number of issuers, particularly on the basis of a general objective of reducing the government footprint or on a claim that smaller issuers are less profitable.


* Ginnie Mae’s supervisory focus should be on its larger issuers, which are its highest risk.


* Ginnie Mae should generally meet commitment authority requests and should not impose higher net worth/liquidity requirements than are publicly posted.


* Congress should fully fund Ginnie Mae Salaries and Expenses.


* Ginnie Mae should reinstate its Targeted Lending Initiative.


While some think tanks have argued in recent year that IMBs pose a growing financial risk, the CHLA Report makes a strong case to the contrary – that the participation of small and mid-sized IMBs in Ginnie Mae represents a very limited taxpayer risk and that the greater concern is a shrinking of the number of GNMA issuers, which would be harmful to mortgage credit and homeownership more broadly.