November 9, 2015
In response to requests for comment on the captioned FINRA Rule 4210, I submit the following:
My employer, Davis-Penn Mortgage Co., is a GNMA Multi-family Seller-Servicer. In just the past 10 years, we have originated, sold and serviced over $2,000,000,000 in GNMA Securities.
The securities market operates successfully as is – and has for years. Our Borrowers post a 0.5% good faith deposit to off-set the cost of non-delivery.
There is no need for additional risk mitigation past the 0.5% good faith deposit. Therefore, there is little or no data on the non-delivery of defaulted multi-family securities that would argue for the posting of additional margins.
The proposed rule change will adversely affect our ability to originate new multi-family construction loans and loans for the rehabilitation of existing multi-family properties. Many of the loans just mentioned are made to projects operated by non-profit organizations or are provided for providers of low income rental units.
In summary, the imposition of additional risk mitigation for the GNMA multi-family security market is not indicated by any available data and would in fact, force many loan providers out of business and, for those remaining, would dictate that higher interest rate and application cost be passed along to boerrowers.
Yours very truly,
Dan Darilek
Senior Vice President
Davis-Penn Mortgage Co.
12650 North Featherwood, Suite 120
Houston, Texas 77034