AD&Co quoted in an Inside Mortgage Finance article titled "Ginnie Weighing Feedback on MBS Capital Requirements"

"Last month, Andrew Davidson & Co. issued a report on the proposed changes to Ginnie eligibility standards. Because nonbank government servicers already hold substantial capital, it said, “this proposal should not disrupt the market.” The firm called Ginnie’s risk-weighted capital proposal “a positive step because it takes a broader view of servicer balance sheets and better aligns with government-sponsored enterprise servicer capital standards.” The risk analytics company noted that servicers need so much capital because “guarantors pay servicers only a fraction of the cost to compliantly service non-performing loans yet overpay for performing loans.” When the cost of servicing NPLs was much lower, the firm said, banks dominated the market, but now more than 90% of Ginnie loans are serviced by nonbanks, “which lack access to the safety net of deposit insurance.” Moreover, during the pandemic, the firm said, policies meant to curtail foreclosures frequently imposed additional costs, often uncompensated, on servicers of FHA and VA loans. “The costs of future changes in federal policy are not hedgeable,” it said."