The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) announced a proposed rule in October that will impact lenders and borrowers who participate in the multifamily market. The proposal will impact how mortgage backed securities, supported by Fannie Mae multifamily or Ginnie Mae multifamily project loans, are issued and settled. Specifically, it would require the establishment of a risk management process called margining between the seller and buyer of the security.
Margining requires the seller and buyer to exchange money as the underlying value
of their transaction changes due to shifts in the relative levels of Treasury
interest rates. The multifamily industry does not have the margining process as
part of its normal business practices. So implementation will increase financial
and operational costs for the industry.
NMHC/NAA and the Mortgage Bankers Association met with Treasury officials recently, and will also be meeting with FINRA and the SEC, to ask them to more thoroughly examine the existing risk management practices used by the multifamily industry. In addition, we joined with an industry coalition in a comment letter that formally requested an extension of the comment period for the proposed rule beyond the current November 10 deadline.
Comments or Questions? Please contact Dave Borsos at firstname.lastname@example.org.
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