The Common Securitization Platform and the Uniform Mortgage-Backed Security

In 2013, Fannie Mae and Freddie Mac (the GSEs) began a joint venture to develop a common securitization platform (CSP) that would integrate the various securitization infrastructure systems that had previously resided separately within each Enterprise. MBA is committed to continued work with the Federal Housing Finance Agency (FHFA) where needed to help support development of the CSP through critical phases, including development of a uniform mortgage-backed security (UMBS). 

Overview:

  • In 2013, the GSEs established a joint venture to build and operate the CSP under the direction and guidance of FHFA.
  • Since this announcement, FHFA has heeded advice provided by MBA and others to limit 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 UMBS in tandem, with the framework for the UMBS dependent upon the CSP.
  • In November 2016, Release 1 of the CSP was successfully implemented. This milestone marked the beginning of Freddie Mac's use of the CSP to issues certain securities. Release 2, which includes issuance of the UMBS, is expected in the second quarter of 2019.

Impact:

  • The CSP will represent a dramatic upgrade from the antiquated and inflexible securitization infrastructures upon which the GSEs have previously relied.
  • Completion of the CSP could also facilitate GSE reform by allowing multiple issuers to pool and issue qualifying securities in exchange for a future government guarantee.
  • Issuance of the UMBS should improve liquidity in secondary mortgage markets by eliminating trading disparities that currently exist between securities issued by Fannie Mae and Freddie Mac.

MBA's Position / Next Steps:

  • MBA strongly supports the modernization of GSE business systems and software, particularly in tandem with the development of the UMBS.
  • MBA believes it is critical that the CSP be viewed in the long-term as a market utility open to all participants who are willing and able to pool eligible securities.
  • MBA believes that-as soon as practicable after Release 2-FHFA should direct that the CSP Master Servicing Module be completed and that the necessary work begin to allow private issuers to utilize the platform.
  • The joint venture of the GSEs has convened an industry advisory panel to provide input on the development of the CSP and the UMBS. MBA is represented on this advisory panel.
  • Release 2 of the CSP, which will include issuance of the UMBS by the GSEs, is expected to take place in the second quarter of 2019.

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