Starting June 3, 2019, Fannie Mae and Freddie Mac will issue new Uniform Mortgage-Backed Securities (UMBS), replacing their current offerings of TBA-eligible mortgage-backed securities.
The new UMBS will be issued through their joint venture, the Common Securitization Solutions (CSS), using the Common Securitization Platform (CSP), the Federal Housing Finance Agency announced.
By providing a timeline for Fannie and Freddie’s transition to UMBS, the FHFA is giving market participants to make the preparations necessary to ensure that the transition is smooth.
“The transition to the new, common security requires planning, investment, and preparation by a wide variety of market participants,” FHFA Director Melvin Watt said. “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.”
Freddie Mac has been using CSS operations for Data Acceptance, Issuance Support, and Bond Administration activities for single-class, fixed-rate, mortgage-backed securities since November 2016. CSS has been using the CSP to process roughly 1,000 new securities each month. It has also been performing monthly bond administration functions related to 260,000 single class securities backed by about 9.8 million loans.
Fannie Mae will join Freddie Mac in using the CSP and CSS operations for these functions with the launch of the UMBS in 2019. At that time, CSS and the CSP will be performing bond administration functions for approximately 900,000 securities backed by nearly 26 million loans.