August 24, 2014

FHFA seeks input on single-security structure

Aug. 13, 2014 – The Federal Housing Finance Agency is taking input until Oct. 13 on a proposed structure for a single security that would be issued and guaranteed by Fannie Mae or Freddie Mac.

One of the goals of the project, advanced in FHFA's 2014 strategic plan for the Fannie and Freddie conservatorships, is to improve overall liquidity of the enterprises' mortgage-backed securities. "This includes the development of a Single Security that will reduce trading value disparities between Fannie Mae MBS and Freddie Mac PCs [participation certificates]," the agency said in its written proposal

The single security would be eligible for trading in the to-be-announced market."FHFA is requesting public input on all aspects of the proposed Single Security structure and is especially focused on issues regarding the transition from the current system to a Single Security," it said.

Specific questions posed relate to TBA eligibility, legacy Fannie Mae and Freddie Mac securities, potential industry impact of the single security initiative and the risk of market disruption.

NAFCU is reviewing the request for input. It will seek members' comments through a Regulatory Alert. FHFA says all comments received will be made public and posted to FHFA's website.