WASHINGTON — Development on the Common Securitization Platform has reached a point where Fannie Mae and Freddie Mac may be able to issue a uniform mortgage-backed security sometime in 2018, the Federal Housing Finance Agency said Thursday.
Building the platform has been a multiyear effort under the direction of the agency and Common Securitization Solutions LLC, a joint venture by the government-sponsored enterprises.
In November, Freddie started using the Common Securitization Platform for bond issuance and bond administration, which the FHFA said is a critical milestone.
"We're excited to use CSS operations and the CSP to support our securities issuance," said David Lowman, executive vice president of Freddie Mac's single-family business.
The next goal is the issuance of mortgage-backed securities from Fannie and Freddie in a single commingled security. This will ensure that Fannie and Freddie enjoy the same pricing on their MBS.
Historically, Freddie securities, known as participation certificates, have traded at a discount to Fannie MBS, which forced Freddie to periodically repurchase its PCs in order to support the pricing.
FHFA Director Mel Watt is expected to update the timetable for the issuance of the single security in the first quarter.
"FHFA has developed a timeline of key achievements to date and will update the timeline as milestones are reached. We remain committed to building the CSP in a transparent manner,” Watt said in a press release Thursday.