WASHINGTON, DC—And so it begins. On Tuesday the FederalHousing Finance Agency announced it was seeking input onthe structure of a proposed single security encompassing holdingsfrom both Fannie Mae and FreddieMac. This would be the first step in a multi-year processto reform the GSEs, it said. Having a single security, instead ofthe current situation in which each GSE issues its own securities,would also boost liquidity for housing financing.
The proposed single security would leverage the GSEs' existingsecurity structures and encompass many of the pooling features ofthe current Fannie Mae Mortgage Backed Security and most of thedisclosure framework of the current Freddie Mac ParticipationCertificate, the FHFA said.
The development is hardly a surprise to the market; The 2014FHFA Scorecard for Fannie Mae and Freddie Mac required the GSEs toidentify what would be necessary to create a single security.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
