Although he could not provide an exact date, Mel Watt, director of the Federal Housing Finance Agency (FHFA), said the new single security and related platform being developed by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac should be ready sometime next year.
Freddie Mac will go live on the new platform with its existing security first, he said. Then, Fannie Mae will go live on the new platform and both GSEs will begin using the new single security.
The multi-year initiative involves replacing the companies' slightly different securities with a single security and developing a new platform to bundle and sell said security into the secondary market. This major undertaking should ‘make the housing finance market more efficient,’ Watt said during the Mortgage Bankers Association's 2015 Convention and Expo held in San Diego earlier this week.
Once the new platform is up and running, the GSEs will eventually open it up to other secondary market participants.
The new platform is being developed by Common Securitization Solutions (CSS), a joint venture that Fannie Mae and Freddie Mac established in 2013 at the direction of the FHFA.
CSS has already released the beta version of the platform and it is being tested by the enterprises, Watt said.
‘In addition, an industry advisory group of stakeholders has started having formal meetings with the enterprises and CSS,’ he said. ‘We believe that this is an invaluable forum for feedback and discussion about the CSP and single security.’
Watt said the GSEs continue to define the parameters of the single security.
The platform and the new single security will be launched in two stages, Watt said.
‘In the first stage, which we are calling Release 1, the CSP will begin issuing and administering only Freddie Mac's securities,’ he explained. ‘In the second phase, Release 2, the CSP will begin issuing and administering securities for both enterprises and will do so using the new single security for the first time.’
‘We realize that there is a degree of impatience and a desire to see all these efforts completed right away,’ Watt said. ‘While I'm not in a position to give you specific dates right now, I can confirm that we plan to announce the Release 1 timeline in 2016. We also hope to be able to announce the Release 2 timeline next year. When we do announce the Release 2 timeline, rest assured that we will meet our commitment to provide at least one year of advance notice before any go live date.’
To read Watt's full speech, click here.