Freddie Mac Now Live On Common Securitization Platform
A single security for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac moved one step closer to reality, now that Freddie Mac has implemented the Common Securitization Platform (CSP), which is basically the technology infrastructure that facilitates the single security.
Now that testing is complete and the proverbial “light switch” for the software has officially been flipped “on,” Freddie Mac has migrated most of its inventory onto the new platform. This is the first stage of the Single Security Initiative, also known as Release 1. In the next phase, which will come in 2018, Fannie Mae will go live on the platform, and both GSEs will begin using the new single security.
The platform was developed by Common Securitization Solutions (CSS), a technology firm that was established in 2015 by the Federal Housing Finance Agency (FHFA) to create a common fungible security that will be issued and guaranteed by either of the GSEs.
“We’re excited to use CSS operations and the CSP to support our securities issuance,” says David Lowman, executive vice president of Freddie Mac’s single-family business, in a release. “This is a milestone marking several years of intensive work across Freddie Mac, Fannie Mae, CSS and FHFA to take this project from concept to reality.
“I’m very appreciative of the collaboration and drive exhibited by everyone working on this project,” Lowman adds. “This is one of the ways we’re working together to build a better Freddie Mac and a better housing finance system for families, customers and taxpayers.”
David M. Applegate, CEO of CSS, says Freddie’s transition onto the platform is an “important step forward in bringing additional liquidity and fungibility to the TBA market.”
So far, Freddie Mac has transferred only certain securities operations for its Gold participation certificates (PCs) and Giant PCs to CSS and the CSP.
Eventually, both GSEs will issue the new Uniform Mortgage-Backed Securities (UMBS) and commingled resecuritizations via the platform.
Freddie Mac has also announced the broad availability of its Dealer Direct securitization portal, through which authorized dealers can efficiently form Freddie Mac Giant securities and access the Freddie Mac REMIC Structure Validation Tool.
In the future, Freddie Mac plans to introduce Dealer Direct functionality that will permit the exchange of legacy PCs for the new UMBS Single Security or, if applicable, another new 25th pay date security.
GSEs Developing Plans To Further Assist Underserved Markets
The Federal Housing Finance Agency (FHFA) in December directed government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to come up with specific plans for how they will address the housing needs of very low-income, low-income and moderate-income families in the manufactured housing, affordable housing preservation and rural housing markets.
The plans will detail how the GSEs will meet the Duty to Serve provisions mandated by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008.
The statute requires Fannie Mae and Freddie Mac to serve three specified underserved markets – manufactured housing, affordable housing preservation and rural housing – by improving the distribution and availability of mortgage financing.
The final rule released by the FHFA does not mandate any particular activities but requires the GSEs to consider ways to better serve families in the three underserved markets. Each must submit a three-year plan to do so. The plans will become effective January 2018.
“With this final rule, which reflects extensive input from a wide variety of stakeholders, FHFA is fulfilling its statutory requirement to implement the Duty to Serve provisions in the Housing and Economic Recovery Act,” says Mel Watt, director of the FHFA, in a release. “We look forward to working with Fannie Mae and Freddie Mac to help meet the critical housing needs for very low-, low- and moderate-income American families around the country in the manufactured housing, affordable housing preservation and rural housing markets. As we do so, we, of course, will evaluate each enterprise proposal to ensure that it will not compromise safety and soundness.”
The FHFA is now gathering feedback from industry stakeholders on this effort via a dedicated webpage, FHFA.gov/DTS.
Further development of the programs is expected to occur in 2017.
“Fannie Mae embraces the FHFA rule to implement the new Duty to Serve provisions, which address the needs of American families in search of solutions to their housing challenges,” says Timothy J. Mayopoulos, president and CEO of Fannie Mae, in a release. “Fannie Mae is committed to working with our partners to help families in underserved markets across the U.S.”