The project to develop a common securitization platform (CSP), as well as a single mortgage-backed security, for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac made significant progress in 2014, according to a report from the Federal Housing Finance Agency (FHFA), overseer of the GSEs.
Not only is the core functionality of the platform now in place, the functionality for non-securitized whole loans (both to onboard such loans and to provide master servicing operations) is now substantially developed, the FHFA says in its progress report on the implementation of its Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac.
In addition, the master servicing operations module that will accompany the platform is now substantially complete.
The CSP team has also made significant progress in the development of the bond administration module and the ability to support both initial and ongoing disclosures. In addition, it has built numerous new system interfaces, including interfaces related to pool and servicer reporting, collapsing pools, dissolving security requests, and servicer transfers, the FHFA reports.
The CSP team has also developed a data acceptance and data calculation service to support the functions performed in each of the CSP modules.
Fannie and Freddie are now testing integration of their systems with the CSP to ensure that the new system's results match the results of each GSE's current system.
In addition, information security and risk management and control policies, procedures, and processes are in development.
Also in development are the security issuance, registration and settlement capabilities of the CSP. The FHFA reports that the CSP team is working with a bank partner to support the security issuance function.
The enterprises' joint venture, Common Securitization Solutions, is handling the bulk of the development work. It is unclear from the FHFA's report whether certain aspects of the platform's development are being outsourced.
Regarding the development of a single security, the FHFA reports that it is still considering feedback from the industry. The agency decided last year that in order to achieve maximum market liquidity, the proposed single security would leverage the enterprises' existing security structures – at least initially. The proposal would encompass many of the pooling features of the current Fannie Mae mortgage-backed security and most of the disclosure framework of the current Freddie Mac participation certificate.