Freddie Mac Now Live On Common Securitization Platform

Posted by Patrick Barnard on December 08, 2016 No Comments
Categories : Residential Mortgage

A single security for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac moved one step closer to reality this week, now that Freddie Mac has implemented the Common Securitization Platform (CSP), which is basically the technology infrastructure that facilitates the single security.

Now that testing is complete and the proverbial “light switch” for the software has officially been flipped “on,” Freddie Mac has migrated most of its inventory onto the new platform. This is the first stage of the Single Security Initiative, also known as Release 1. In the next phase, which will come in 2018, Fannie Mae will go live on the platform and both GSEs will begin using the new single security.

The platform was developed by Common Securitization Solutions (CSS), a technology firm that was established last year by the Federal Housing Finance Agency (FHFA) to create a common fungible security that will be issued and guaranteed by either of the GSEs.

“We’re excited to use CSS operations and the CSP to support our securities issuance,” says David Lowman, executive vice president of Freddie Mac’s single-family business, in a release. “This is a milestone marking several years of intensive work across Freddie Mac, Fannie Mae, CSS and FHFA to take this project from concept to reality.

“I’m very appreciative of the collaboration and drive exhibited by everyone working on this project,” Lowman adds. “This is one of the ways we’re working together to build a better Freddie Mac and a better housing finance system for families, customers and taxpayers.”

David M. Applegate, CEO of CSS, says Freddie’s transition onto the platform is an “important step forward in bringing additional liquidity and fungibility to the TBA market.”

So far, Freddie Mac has transferred only certain securities operations for its Gold participation certificates (PCs) and Giant PCs to CSS and the CSP.

Eventually, both GSEs will issue the new Uniform Mortgage-Backed Securities (UMBS) and commingled resecuritizations via the platform.

Freddie Mac has also announced the broad availability of its Dealer Direct securitization portal, through which authorized dealers can efficiently form Freddie Mac Giant securities and access the Freddie Mac REMIC Structure Validation Tool.

In the future, Freddie Mac plans to introduce Dealer Direct functionality that will permit the exchange of legacy PCs for the new UMBS Single Security or, if applicable, another new 25th pay date security.

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