Freddie Mac Implements Release 1 of Common Securitization Platform
Freddie Mac announced yesterday that it successfully implemented Release 1 of the Common Securitization Platform.
Freddie Mac is now using the CSP for Data Acceptance, Issuance Support and Bond Administration activities related to current single-class, fixed-rate, mortgage-backed securities. Implementation of Release 1 demonstrates that the system, operations and controls of the CSP and Common Securitization Solutions, a joint venture owned by Fannie Mae and Freddie Mac, are functional. Release 1, launched on Nov. 21, enabled Freddie Mac to transfer certain securities operations for its Gold participation certificates and Giant PCs to CSS and the CSP.
“The successful implementation of Release 1 is a significant milestone toward the ultimate goal of a common securitization platform and a single security,” said Federal Housing Finance Agency Director Melvin Watt.
Release 1 paves the way for Release 2, which will enable a combined Freddie Mac and Fannie Mae $3.5 trillion market of to-be-announced MBS. This common, single mortgage-backed security is to be called the Uniform Mortgage-Backed Security, a common fungible security that will be issued and guaranteed by either Fannie Mae or Freddie Mac, which will be known as Supers.
“UMBS and Supers have the potential to transform the separate multi-trillion dollar TBA markets for Freddie Mac and Fannie Mae MBS into a single TBA market of $3.5 trillion, second in size only to the global market for U.S. Treasuries,” said Freddie Mac Executive Vice President of Single-Family Business Dave Lowman.
Lowman estimated $1.4 trillion in Freddie Mac 45-day PCs, of which an estimated $1.1 trillion are expected to be exchangeable by PC holders for 55-day UMBS once the new security is officially launched.
Freddie Mac also announced availability of Dealer Direct, its online securitization portal. Through this portal, authorized dealers can 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.
FHFA expects to announce a timeframe for implementation of Release 2 early next year. A current timeline can be accessed at http://www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Common-Securitization-Platform-and-Single-Security-Timeline.aspx.
Additional information about the Single Security Initiative and the CSP is available at http://www.freddiemac.com/mbs/html/single_security_csp.html.
