Agencies ready common securitization
Fannie Mae and Freddie Mac are on track with the development of the common securitization platform and issuance of the single security, but investors who were hoping the platform could do anything to aid in the resurgence of the private label MBS market were disappointed.
When asked by Structured Finance Industry Group executive director Richard Johns at this week's ABS East conference in Miami, Florida, if the platform had any potential application in the PLS market, one panellist's words were not encouraging.
“Today, the way the common securitization platform is being designed, it is focused on Fannie and Freddie. They operate a guarantor business model, and the [single security] and common securitization platform are building to support that model,” said David Applegate, chief executive officer of Common Securitization Solutions.
Wednesday’s keynote address gathered together officials from the two government-sponsored enterprises and the Federal Housing Finance Agency to discuss progress on the platform and the timeline for the first issuance. The FHFA gave an update this week, saying that the platform would be made available first for Freddie Mac, and then both Freddie and Fannie Mae sometime after that in 2016.
The panelists noted that when the platform goes live next year, it should offer cost advantages to both GSEs and create efficiencies and infrastructure that could have other potential uses down the road.
“The tools are there, and if [GSE] reform takes place they can be levered and used for other purposes,” said Applegate.