Supervisors Symposium

CAPITAL ADEQUACY DEPENDS ON TREATMENT OF MORTGAGE SERVICING RIGHTS

• Mortgage securitization creates a “mortgage servicing right” (MSR) • Present value of the expected servicing fees • Cash and MSRs are the two main assets of nonbanks • Leverage ratio used in current CSBS, FHFA, and Ginnie Mae capital rules treats cash and MSRs as equivalents • Proposed Ginnie Mae rule and current bank rule treat MSRs as more risky than cash

MOST NONBANKS HAVE CAPITAL ABOVE REGULATORY THRESHOLDS, BUT HOW MANY DEPENDS ON MEASURE

Source: Calculations based on data from the Conference of State Bank Supervisors, Nationwide MultiState Licensing System & Registry. Data are for 100 largest for-profit Ginnie Mae issuers.