As promised, Freddie Mac implemented Release 1, the next step towards single securitization, according to the Federal Housing Finance Agency.
Release 1 of the Common Securitization Platform was implemented on November 21, and announced today. Freddie Mac is now using CSP for data acceptance, issuance support and bond administration activities released to current single-class, fixed-rate, mortgage backed securities.
This development paves the way for Release 2, which will enable a combined Freddie Mac and Fannie Mae $3.5 trillion market of mortgage backed securities. The single security is a joint initiative from Fannie and Freddie to develop a single mortgage-backed security that will be issued by the government-sponsored enterprises to finance fixed-rate mortgage loans backed by one- to four-unit single-family properties.
Last year, the FHFA revealed a detailed look at the project’s timeline for implementation, stating, at the time, that it planned to release a more detailed update on the implementation of the single security this year.
Earlier this year, the FHFA announced that Freddie Mac would take the first step in the fourth quarter of this year, and Fannie Mae would follow. The FHFA said that it anticipates the full implementation of Release 2 to be completed in 2018.
The second phase of the rollout, Release 2, will see both GSEs begin to use the data acceptance, issuance support, disclosure and bond administration modules to perform activities related to their current fixed-rate securities, both single- and multi-class; to issue Single Securities, including commingled resecuritizations; and to perform activities related to the underlying loans.
For now, Freddie Mac’s implementation of Release 1 demonstrates that the system, operations and controls of the CSP and Common Securitization Solutions, which is working with the GSEs to implement the new market, are functional.
“The successful implementation of Release 1 is a significant milestone toward the ultimate goal of a common securitization platform and a single security,” FHFA Director Melvin Watt said.
The FHFA expects to release a timeline for the implementation of Release 2 during the first quarter of 2017.
“FHFA has developed a timeline of key achievements to date and will update the timeline as milestones are reached. We remain committed to building the CSP in a transparent manner,” Watt said.
Freddie Mac expressed its excitement over the implementation and acknowledged the work it took to get to this point.
“We're excited to use CSS operations and the CSP to support our securities issuance,” said David Lowman, executive vice president of Freddie Mac's Single-Family Business. “This is a milestone marking several years of intensive work across Freddie Mac, Fannie Mae, CSS and FHFA to take this project from concept to reality.”
“I'm very appreciative of the collaboration and drive exhibited by everyone working on this project,” Lowman said. “This is one of the ways we're working together to build a better Freddie Mac and a better housing finance system for families, customers and taxpayers.”
Fannie Mae also joined in, giving its congratulations and looking ahead to the implementation to Release 2.
“Fannie Mae congratulates Common Securitization Solutions and Freddie Mac on Release 1 of the Common Securitization Platform and looks forward to continuing work on Release 2 to facilitate a smooth and transparent transition to the Single Security,” said Rick Sorkin, Fannie Mae senior vice president of securitization and capital markets.
