WASHINGTON — After several years of preparation, Fannie Mae and Freddie Mac will start issuing a new, common mortgage-backed security starting June 3, 2019, the Federal Housing Finance Agency said Wednesday.
Currently, the two government-sponsored enterprises are issuing mortgage-backed securities via the to-be-announced market. But that will be replaced by the Uniform Mortgage-Backed Security, issued through the Common Securitization Platform.
“We have now set the specific date that the Enterprises will start issuing the UMBS and I urge the industry to get ready now to ensure smooth, successful implementation,” FHFA Director Mel Watt said in a press release.
“The transition to the new, common security requires planning, investment, and preparation by a wide variety of market participants,” he added.
Since 2016, Freddie Mac has been using Common Securitization Solutions — a joint venture of Fannie Mae and Freddie Mac — for certain activities related to current mortgage-backed securities.
“CSS has been using the CSP to process about 1,000 new securities each month and performing monthly bond administration functions related to 260,000 single class securities backed by approximately 9.8 million loans,” the housing finance agency said in its press release. “With the launch of the UMBS on June 3, 2019, Fannie Mae will join Freddie Mac in using the CSP and CSS operations for these functions. At that time, CSP and CSS operational capabilities will expand to include the administration of multi-class securities and commingled Enterprise UMBS and the production of UMBS disclosures.”