November 26, 2018
Just before the Thanksgiving break, the MBA’s annual Accounting and Financial Management conference took place in Orlando, fostering discussions about industry trends and the best strategies to optimize growth and manage risk in these difficult times. From a regulatory perspective, one of the most prominent issues front and center for attendees was the upcoming Ginnie Mae stress testing program. Ginnie is concerned nonbank lenders will not be profitable enough nor will they have the capital levels necessary to sustain losses in adverse market conditions and plans to introduce stress testing of its participating originators. And nonbanks have picked up the share of Ginnie Mae originations that the banks have shed in recent years.
How can you be sure you don’t lose the ability to be a Ginnie Mae seller/servicer? Riivos can help.
Riivos integrates your core systems—general ledger, loan origination system and payroll provider—to build a holistic financial model of your organization. We map the mortgage manufacturing process, from lock to fund to settle, all the inputs and costs along the way, and ultimately the impact on the balance sheet and P&L of different scenarios. Users can leverage Riivos to conduct sensitivity analysis and understand how a change in volume, product mix, productivity or MSR retention strategy affects every part of their business, including their financials.
In this white paper, Ginnie guidance states: “New requirements will soon begin phasing in that subject Issuers to an analysis of how their financial strength would be impacted by adverse future scenarios. These ‘stress testing’ exercises will play an increased role in our dialogues with Issuers and oversight activities in the future…. Ginnie Mae’s evaluations of Issuer risk will be based upon modeled and other multiple-factor analyses.”
Do you have a robust way to conduct multi-factor analyses across every part of your company? How would losing your Ginnie ticket affect your business? Make sure you don’t have to find out by utilizing Riivos to ensure your company is adequately capitalized and compliant, no matter the market conditions. Reach out today to learn more.
For more information on how Riivos can help with stress testing, contact us here.