The Federal Housing Finance Agency (FHFA) announced on Thursday in an update that it expects to meet the stated goals for implementing the Single Security and the Common Securitization Platform (CSP).
The Single Security is a joint initiative of the GSEs under the direction of their conservator, the FHFA, to develop a single mortgage-backed security issued by the GSEs to finance fixed-rate mortgage loans backed by single-family properties. The CSP is a technology and operational platform developed by Common Securitization Solutions (CSS), a joint venture of the GSEs, that will perform many of the core back office operations for the Single Security, according to FHFA.
The 2016 Conservatorship Scorecard for the GSEs and CSS call for the implementation of the first use of the CSP software in 2016 (known as Release 1) and for the GSEs to begin using the CSP to issue Single Securities in 2018 (known as Release 2), FHFA reported. According to the announcement, the GSEs and CSS expect to meet those goals.
“This Update reflects our ongoing commitment to transparency. It also reflects the outstanding public and industry input and support we have already received and that we look forward to continuing to have as we move toward the goal of launching the CSP,” said FHFA Director Melvin L. Watt. “The CSP and the Single Security are ambitious projects that we are confident should improve the overall efficiency and liquidity of the mortgage market and result in tremendous savings to taxpayers.”
In the update released Thursday, various phases of testing required for Release 1 and Release 2 are described; the update also announces planned issuance of Single Security features and disclosures to the market.
“This Update reflects our ongoing commitment to transparency.”
Mel Watt, FHFA Director
Thursday’s update also provides information on the ongoing alignment of GSE programs, policies, and practices as well as processes the GSEs will follow to further support the Single Security, according to FHFA.
FHFA reported that it expects to announce the Single Security’s intended launch date to stakeholders at last 12 months in advance.
“Today’s update highlights the progress Fannie Mae has made to date working with FHFA, Freddie Mac, and Common Securitization Solutions (CSS) to develop and bring the Single Security to market,” said Andrew Bon Salle, EVP of Single-Family Business for Fannie Mae. “We continue taking steps to provide transparency around these efforts that will give market participants time to plan for and understand this change. We will move forward with this work, with the ultimate goal of increasing liquidity in the housing finance market and creating a stronger system.”
Freddie Mac released the following statement on the FHFA’s latest update:
“Freddie Mac is meeting the milestones that will make the Single Security and a stronger housing finance system a reality. We have completed joint system-to-system testing with Common Securitization Solutions (CSS) as preparation for using their Common Securitization Platform for a range of activities related to Freddie Mac Participation Certificates (PC) and Giant PC issuance. The progress charted in the Federal Housing Finance Agency’s (FHFA) latest update is leading to a more liquid TBA market and a stronger housing finance system. We look forward to working with FHFA, Fannie Mae, CSS and other stakeholders to reach the remaining milestones and bring the Single Security to market.”
The FHFA is welcoming public input on the update released Thursday, submitted either electronically at www.fhfa.gov or to the FHFA, Office of Strategic Initiatives, 400 7th Street, S.W., Washington, DC 20219. All submissions will be made public and posted to FHFA’s website, according to FHFA.