FHFA Issues RFI on Fannie Mae, Freddie Mac UMBS Pooling Practices

The Federal Housing Finance Agency yesterday issued a Request for Input about Fannie Mae’s and Freddie Mac’s pooling practices for the formation of “To-Be-Announced”-eligible Uniform Mortgage-Backed Securities. 

FHFA also seeks public input about other policies and practices that might affect UMBS fungibility, including the Enterprises’ oversight of UMBS prepayment speeds and alignment.

This RFI follows on the launch of UMBS earlier this year and seeks to ensure that UMBS remain a source of stable, affordable liquidity for the U.S. housing finance system. The requested input will help FHFA determine whether further action or alignment is necessary to ensure reasonably consistent security cash flows and continued fungibility of the Enterprises’ UMBS.

To facilitate market engagement, the RFI includes a proposal for Enterprise pooling practices that would seek to channel the majority of the Enterprises production into larger, multi-lender pools to ensure more uniform cash flows for TBA investors, continue to allow issuance of specified pools under appropriate circumstances and align Enterprise policies around the actions to be taken when a specific seller/servicer exhibits prepayment behavior outside acceptable norms which may adversely impact UMBS. 

FHFA is also seeking input on whether more aligned pooling practices as proposed would facilitate the issuance of UMBS by market participants beyond Fannie Mae and Freddie Mac.

FHFA invites feedback on all aspects of this RFI and the proposed approach to UMBS pooling within 45 days of the publication of this document, no later than December 19,.  Input to the RFI should be submitted electronically (https://www.fhfa.gov/AboutUs/Contact/Pages/Request-for-Information-Form.aspx) or via  mail to the Federal Housing Finance Agency, Division of Conservatorship, 400 7th Street SW, 8th floor, Washington, D.C., 20219.