Freddie Mac to Debut New Single Security-Related Investor Disclosures

Freddie Mac, McLean, Va., announced it will implement new or revised disclosures for single-family fixed-rate and adjustable-rate mortgage-backed securities.

The disclosures are being implemented in connection with the Single Security Initiative, which is designed to increase liquidity and fungibility in the $3.5 trillion to-be-announced MBS market. The disclosures are a key step toward the launch of the uniform mortgage-backed security, which is expected to occur in second quarter 2019.

Beginning Aug. 28, Freddie Mac will release updated disclosures providing standardized loan-level and pool-level data for all of its mortgage participation certificates.

“Aligning disclosures is one of the many steps we are taking as we prepare for the introduction of the UMBS,” said Mark Hanson, Freddie Mac senior vice president of securitization. “This is a successful joint effort among several parties that will enhance the U.S. mortgage industry by modernizing the TBA market for both Freddie Mac and Fannie Mae.”

The Single Security Initiative is a joint Freddie Mac/Fannie Mae project under which a new common security, known as the UMBS, will be issued and guaranteed by either Freddie Mac or Fannie Mae. Along with their joint venture, Common Securitization Solutions LLC, Freddie Mac and Fannie Mae are working under the direction of the Federal Housing Finance Agency to prepare for the introduction of the UMBS. CSS operates the Common Securitization Platform (CSP), which will handle certain functions related to the issuance, administration and disclosures of UMBS on behalf of the GSEs.

The Single Security Initiative will result in both GSEs issuing the new UMBS. Single-class resecuritizations of UMBS, whether commingled or not, will be called Supers. (Supers are the UMBS counterpart to Freddie Mac’s Giant PCs and Fannie Mae’s Megas.)

Freddie Mac estimated $1.4 trillion in its 45-day PCs, of which an estimated $1.1 trillion will be eligible for exchange by PC holders for 55-day UMBS once the new security is officially launched.