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the latest SECONDARY MARKET A na ly t ic s FHFA Pushes Forward on Common Securitization Platform The agency is making strides in creating common ground for the GSEs. T he Federal Housing Finance Agency (FHFA) touted progress made toward building a new common securitization platform between the GSEs, saying the joint venture "reached some important milestones." A Certificate of Formation was filed with the Secretary of State of the State of Delaware, establishing Common Securitization Solutions, LLC, (CSS) as a limited liability company. This authenticates CSS as a legally recognized entity and marks an important step in creating the joint venture, which is an equally owned subsidiary of Fannie Mae and Freddie Mac, FHFA explained. "The filing of the Certificate of Formation represents a significant milestone toward the goal of building a new secondary mortgage market infrastructure," said Edward J. DeMarco, FHFA acting director. DeMarco added that he is "pleased with the progress being made." Part of that progress includes new office space to house the jointly created entity. FHFA says a three-year lease for commercial office space to house CSS has been signed by authorized officials from both Fannie Mae and Freddie Mac. The space is located in Bethesda, Maryland, and was secured following what FHFA describes as a "rigorous process." In addition, an executive recruitment firm has been retained to identify candidates for the CEO and chairman of the board of managers of CSS, and interviews are already under way. DeMarco announced back in March that one of his 2013 goals was the formation of a new joint business entity, to be located separately from Fannie and Freddie and headed by a CEO and chairman of the board of managers. "This announcement shows clear progress toward meeting those goals," according to a statement from the FHFA office. "We are pleased that Common Securitization Solutions, LLC, has been established and that office space for this new joint venture has been secured," said Terry Edwards, Fannie Mae's EVP and COO. "These are important steps toward building a more sustainable housing finance system with increased private capital participation and decreased taxpayer risk." The M Report | 57 se c on da r y m a r k e t —Barry Zigas, Bipartisan Policy Center s e r v ic i ng The government should not be the guarantor of first resort. The government should be the guarantor of last resort." Or ig i nat ion insurers and say, 'You need to put more capital in the pot,'" Zigas explained. On the other hand, Hensarling's PATH bill removes the government guarantee from the equation—a move that BPC regards as going too extreme, though Zigas acknowledged that a federal guarantor should only be involved in a "catastrophic" situation. "We came to believe through the work we did that the private market is not prepared to provide the levels of capital that are going to be necessary to meet homeowners' needs unless they know there's a federal guarantee behind those securities," he said. "I think we agree with Congressman Hensarling on this one point, which is that the government should not be the guarantor of first resort. The government should be the guarantor of last resort." Asked about the probability that a bipartisan effort could even be achieved—especially at a time when political squabbling has brought the country to a standstill—Zigas says he is encouraged by the dialogues that have taken place so far and expects the left and right will be able to come together on the matter in the future. "How near that future is? That depends on a lot of factors that are very, very difficult to assess right now," he said. "I think the momentum is in the right direction." The full interview can be seen on Zillow's blog or at its YouTube page.