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Capital and Liquidity Requirements
6 Months Ended
Jun. 30, 2019
Brokers And Dealers [Abstract]  
Capital and Liquidity Requirements

(9)

Capital and Liquidity Requirements

Newmark is subject to various capital requirements in connection with seller/servicer agreements that Newmark has entered into with the various GSEs. Failure to maintain minimum capital requirements could result in Newmark’s inability to originate and service loans for the respective GSEs and could have a direct material adverse effect on Newmark’s unaudited condensed consolidated financial statements. Management believes that, as of June 30, 2019 and December 31, 2018, Newmark has met all capital requirements. As of June 30, 2019, the most restrictive capital requirement was Fannie Mae’s net worth requirement. Newmark exceeded the minimum requirement by $329.2 million.

Certain of Newmark’s agreements with Fannie Mae allow Newmark to originate and service loans under Fannie Mae’s Delegated Underwriting and Servicing (“DUS”) Program. These agreements require Newmark to

maintain sufficient collateral to meet Fannie Mae’s restricted and operational liquidity requirements based on a pre-established formula. Certain of Newmark’s agreements with Freddie Mac allow Newmark to service loans under Freddie Mac’s Targeted Affordable Housing (“TAH”) Program. These agreements require Newmark to pledge sufficient collateral to meet Freddie Mac’s liquidity requirement of 8% of the outstanding principal of TAH loans serviced by Newmark. Management believes that, as of June 30, 2019 and December 31, 2018, Newmark has met all liquidity requirements.

In addition, as a servicer for Fannie Mae, Ginnie Mae and Federal Housing Administration, Newmark is required to advance to investors any uncollected principal and interest due from borrowers. As of June 30, 2019 and December 31, 2018, outstanding borrower advances were approximately $0.1 million and $0.2 million, respectively, and are included in “Other assets” in Newmark’s unaudited condensed consolidated balance sheets.