4 Key Points to Consider When Transitioning from Best Efforts to Mandatory Delivery
Making the decision to transition from Best Efforts to Mandatory delivery is a process that begins well before an organization actually takes the leap. As you contemplate the right transition time and strategy for your organization, you will want to conduct a preliminary evaluation to ensure success.
While there are many approaches to a viable hedging strategy, those considering a plan of action should take a moment to review four critical “stepping stones” as you move forward. If all of the criteria are met, only then should you take the next step.
Step #1 – Evaluate Net Worth:
The first step focuses on the organization’s financial health. An appropriate minimum net worth should fall between $1 and $1.5 million, and that is the bare minimum. If you plan to rely on approval from GSE’s and a number of other investor counter-parties, the desired minimum increases by a base of $1 million. The warehouse banks will also vary in their requirements, so it’s best to discuss your plans with them early on.