Mortgage Agencies Gird For New Security Structure

The three mortgage secondary-marketing agencies are looking closely at a new method for securitizing loans.

At issue are Fasits, financial asset securitization trusts, which can begin trading Sept. 1.

The trust vehicle was created in tax reform legislation last year, and can be used with a variety of consumer loans, including home equity products, and with commercial mortgages.

Executives from Fannie Mae, Freddie Mac, and Ginnie Mae say the use of Fasits for packaging residential mortgages would not affect the billions of dollars of business they do annually through established securitization vehicles such as Remics, or real estate mortgage investment conduits.

The Fasit structure allows the issuer to add to loan pools after an initial securitization has occurred. The versatility is not possible in most mortgage securities pools, which carry a set amount of loans. The new format could have financial benefits from a tax and flexibility standpoint for the agencies, the executives said.

The representatives-Sharon Stieber, a vice president with Fannie Mae, David J. Borsos, a director with Freddie Mac, and George Rose, a securities manager with Ginnie Mae-were speaking at a mortgage securitization symposium sponsored in New York by Information Management Network.