GSEs Partner With Industry to Form Advisory Group For Common Securitization Platform

Freddie Mac, Fannie Mae, and Common Securitization Solutions, LLC (CSS) jointly announced on Wednesday the development of an Industry Advisory Group. The group will provide feedback and share information on efforts to build the Common Securitization Platform (CSP) and implement the Single Security.

According the organizations, the Single Security is a joint initiative of Freddie Mac and Fannie Mae, directed by the Federal Housing Finance Agency (FHFA), to develop a single mortgage-backed security that will be issued by the Enterprises to finance fixed-rate mortgage loans backed by one-to four-unit single-family properties.

The CSP is a technology and operational platform that is being developed by CSS, the companies said. This new development is a new venture of both Freddie Mac and Fannie Mae. CSP will perform many of the core back office operations for the Single Security, as well as most of the Enterprises' current securitization functions for single-family mortgages, on behalf of the Enterprises. The CSP is necessary for the implementation of the Single Security.

In May, the Federal Housing Finance Agency (FHFA) issued an update to mortgage-backed security (MBS) structure initiative, also known as Single Security. The new changes to the Single Security structure initiative were based on 23 responses to a “Request for Public Input: Proposed Single Security Structure (RFI)” released in August 2014 by the FHFA. The Single Security initiative has not yet been approved or enacted.

"FHFA's Update should give everyone a sense of how the Single Security will be developed and the solid progress that has been made over the past year,” said Dave Lowman, EVP of single-family business at Freddie Mac. “We strongly believe in the Single Security's potential for expanding liquidity in the TBA (to be announced) market, lowering housing finance costs, and making the housing finance system more competitive and resilient."

The 2014 Conservatorship Strategic Plan for Fannie Mae and Freddie Mac consisted of creating a single MBS that the enterprises could provide finance fixed-rate mortgage loans backed by one to four single-family unit properties. According to the FHFA, the initial goal was to assist in building a Common Securitization Platform (CSP) and support the statutory obligation to ensure the liquidity of the nation’s housing finance markets issued by the FHFA. Taxpayers would also not have to suffer the cost of subsidizing Freddie Mac’s securitization of single-family mortgage loans with the Single Security initiative.

“Today’s Single Security Update is an important milestone, providing additional details on the features of the Single Security and the strong progress made to date by Fannie Mae, Freddie Mac, and Common Securitization Solutions (CSS) on implementation planning,” said Andrew Bon Salle, EVP of single-family business at Fannie Mae. “We will continue to work with FHFA, Freddie Mac, and CSS to ensure we transition to the Single Security in a safe and sound manner.”

Participants in the Industry Advisory Group will come from:

• Freddie Mac
• Fannie Mae
• Common Securitization Solutions
• The Center for Responsible Lending
• Financial Services Roundtable
• Fixed Income Clearing Corporation
• Mortgage Bankers Association
• Independent Community Bankers Association
• American Bankers Association
• Securities Industry and Financial Markets Association
• Structured Finance Industry Group