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FHFA Scorecard Says First Phase of Single Security Set for 2016
Monday, December 28, 2015 6:40 AM

Fannie Mae, Freddie Mac, and Common Securitization Solutions (CSS) will all be graded in 2016 by a scorecard released last week by the Federal Housing Finance Agency (FHFA).

CSS is a new secondary mortgage infrastructure created by Fannie and Freddie to operate a new platform to deal a single mortgage-backed security. The FHFA’s strategic plan for Fannie and Freddie is to develop the single security, which would be mutually interchangeable with legacy Fannie Mae and Freddie Mac mortgage-backed securities.

CSS was created in November 2014 to operate the Common Securitization Platform (CSP), which will serve as the seller of the single security. CSP is also intended to replace certain elements of the Fannie and Freddie proprietary systems for securitizing mortgages and performing associated back-office and administrative functions.

According to the scorecard, in 2016 CSS is expected to:

  • Implement the CSP for Freddie Mac’s existing single-class securities in 2016, and work toward implementing the single security on the CSP for Fannie and Freddie by 2018;
  • Incorporate a focus on functions necessary for single-family securitization activities, develop operational and system capabilities for CSP to facilitate issuance and administration of the single security; and
  • Publish an aligned timeline for implementing the single security that provides stakeholders with at least 12 months’ notice prior to implementing the single security.

Fannie and Freddie are tasked with:

  • Working to increase access to single-family mortgage credit for creditworthy borrowers, consistent with the full extent of applicable credit requirement and risk management practices;
  • Developing post-crisis loss-mitigation activities and prepare for the expiration of the Home Affordable Modification Program and Home Affordable Refinance Program;
  • Continuing to responsibly reduce the number of severely aged delinquent loans and real estate owned properties;
  • Maintaining the dollar volume of new multifamily business for each enterprise at $31 billion or below;
  • Reducing taxpayer risk by increasing the role of private capital in the mortgage market through single and multifamily credit risk transfers and developing a risk measurement framework with the FHFA; and
  • Providing active support for mortgage data standardization initiatives.