Second Phase Of GSEs’ Single Security Initiative Delayed

Posted by Patrick Barnard on March 24, 2017 No Comments

The second phase of the initiative to get government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac onto the Common Securitization Platform (CSP) and start using a new single security has been delayed until 2019, the Federal Housing Finance Agency (FHFA) announced on Thursday.

Release 2 of the CSP, which will allow Fannie Mae and Freddie Mac to issue a common security called the Uniform Mortgage-Backed Security (UMBS), is now planned for the second quarter of 2019, the FHFA says. Originally, this was supposed to happen in 2018.

The FHFA does not provide any reason for the delay in its release.

In December it was announced that Freddie Mac had moved its existing security onto the platform, which is basically the technology infrastructure that facilitates the single security. This was the first stage of the Single Security Initiative, also known as Release 1.

FHFA reports that currently, Freddie Mac is using the data acceptance, issuance support, and bond administration modules of the CSP for activities related to its current single-class, fixed-rate securities participation certificates (PCs) and giant PCs.

In the next phase, which will now come in 2019, 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, a technology firm that was established in 2015 by the FHFA to create a common fungible security that will be issued and guaranteed by either of the GSEs.

“The CSP and single security are ambitious projects,” says Melvin L. Watt, director of the FHFA, in the release. “I am very pleased with the hard work and determination of all those involved who helped make Release 1 a success and laid the foundation for successful implementation of Release 2. I am also grateful for the support and input we have received from the public and from industry participants.

“I encourage all market participants to begin moving forward with their preparations to make the changes they will need to accompany implementation of the single security initiative,” Watt adds.

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