FHFA’s Thompson Says Single Security ‘On Track’ For 2019

NEW YORK–Sandra Thompson, Deputy Director with the Division of Housing Mission and Goal with the Federal Housing Finance Agency, said the agency is on track for Fannie Mae’s and Freddie Mac’s transition to the Single Security by June 2019.

“We’re urging the entire mortgage industry to continue preparing for implantation of this key initiative,” Thompson said here at the recent Mortgage Bankers Association’s National Secondary Market Conference & Expo.

In 2013, Fannie Mae and Freddie Mac began a joint venture to develop a common securitization platform that would integrate the various securitization infrastructure systems that had previously resided separately within each Enterprise. Progress has moved slowly; FHFA now estimates the Single Security will be ready by next year.

Thompson also defended Fannie Mae and Freddie Mac’s continued use of Guarantee Fees, also known as “g-fees,” saying the fees are “appropriate for risks and expenses” and account for the amount of risk the government-sponsored enterprises must underwrite for loans. “We continue to monitor use of g-fees and its impact on all lenders,” she said.

Thompson said the GSEs continue to engage in sales of non-performing loans, which has improved the quality of the GSE portfolios and offer protection to investors and taxpayers. Since last summer, she said, the GSEs have sold off $16 billion in NPLs.

Thompson also noted progress with the GSEs “Duty to Serve” program, which requires Fannie Mae and Freddie Mac to facilitate a secondary market for mortgages on housing for very low-, low- and moderate-income families in three specified underserved markets: manufactured housing; affordable housing preservation; and rural housing.

“Both enterprises have published and finalized their plans,” Thompson said. “We want them to provide responsible liquidity, that we implement them with strong safety and soundness principles…so that we can accommodate any liquidity concerns in those markets. We want to do this in a responsible way.

As to the future of FHFA–Director Mel Watt’s term ends in early 2019–Thompson noted, “Nobody knows; and you’re guess is as good as mine. Change is just a part of what happens in Washington.”