As anticipated, the Federal Home Loan Mortgage Corp. has implemented the common securitization platform on some of its securities.
The
CSP was first proposed in 2012 for both Freddie Mac and Fannie Mae by the then acting director of the Federal Housing Finance Agency.
FHFA has said that the platform is expected to reduce interest rates on home loans, improve the lending process and cut transaction costs.
The CSP is operated by
Common Securitization Solutions LLC, a joint venture between Fannie and Freddie.
On Thursday, McLean, Virginia-based Freddie announced
that it has implemented the CSP for certain single-family fixed-rate mortgage-backed securities.
FHFA reported in July that the planned first release of the platform will allow Freddie to use various modules to perform activities tied to its current single-class, fixed-rate securities-participation certificates and giant PCs in addition to some activities related to the underlying loans.
In today’s announcement, Freddie said, “This development, commonly called Release 1, paves the way for Release 2, which will enable a combined Freddie Mac and Fannie Mae $3.5 trillion market of to-be-announced MBS.”
Release 1 was launched on Nov. 21 and enables Freddie to transfer
certain securities operations for its Gold PCs and Giant PCs to CSS.
CSS Chief Executive Officer David M. Applegate noted in Thursday’s statement, “Today’s announcement by Freddie Mac that it has successfully completed its first bond issuance and bond administration on the platform is an important step forward in bringing additional liquidity and fungibility to the TBA market.”
With the implementation of Release 1, both government-sponsored enterprises can implement the single-security initiative by issuing a new uniform MBS, or UMBS. This includes commingled resecuritizations.
Freddie additionally said that the Dealer Direct securitization portal is now broadly available. This will enable authorized dealers to form Freddie Mac giant securities and access its REMIC Structure Validation Tool. Eventually this portal will permit the exchange of legacy PCs for the new UMBS single security.
