The Common Securitization Platform and Single Security Framework

In 2013, the Federal Housing Finance Agency (FHFA) began development of a common securitization platform (CSP) that would integrate the various securitization infrastructure systems that resided separately within Fannie Mae and Freddie Mac (the GSEs). MBA is committed to continued work with FHFA where needed to help support development of the CSP through critical phases, including development of the single security. 

Overview:

  • In 2013, FHFA began development of a CSP that would integrate the various securitization infrastructure systems that resided separately within Fannie Mae and Freddie Mac.
  • Since this announcement, FHFA has heeded advice given by MBA and others and limited the CSP to GSE issuance alone, simplifying the development requirements while allowing private issuers to continue utilizing and investing in their own platforms.
  • FHFA is developing the CSP and the proposed single security framework in tandem, with the single security framework dependent upon the CSP.
  • In the Fourth Quarter of 2016, Release 1 is expected to occur with Freddie Mac beginning to issue its PC on the CSP. Release 2, including the single security (called the UMBS) is expected in 2018.

Impact:

  • Completing development of the CSP would be a significant step that would also facilitate GSE reform by allowing multiple issuers to pool and issue qualifying securities in exchange for a future government guarantee.
  • It is critical that the CSP be viewed long-term as a market utility open to all participants who are willing and able to pool eligible securities. However, it is important that a truly private market, based on different frameworks and systems, be allowed to exist side-by-side with the CSP.
  • As soon as practicable after Release 2, FHFA should direct the CSP to complete the Master Servicing Module and begin the work necessary to allow private issuers to utilize the platform.

MBA's Position / Next Steps:

  • MBA strongly supports the modernization of GSE business systems and software, particularly in tandem with the development of a single, fungible agency security.
  • FHFA continues to drive development of the CSP, which is expected to be a multi-year effort done in parallel to the development of a single security. Release 1 is expected to take place in Q4, 2016, with Release 2 and the single security finalized in 2018.
  • Common Securitization Solutions, in conjunction with the GSEs and FHFA, has convened an industry advisory panel to help facilitate feedback to the development process. MBA is represented with two seats on the advisory panel.
  • MBA is committed to continuing its work with FHFA where needed to help support development of the CSP through critical phases, including development of the single security.

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