October 2016 - Changing of the Guard

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 61 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SECONDARY MARKET THE LATEST Two Brands, One Solution { { We cover the territory. Futura Title & Escrow Corp.'s brands offer a single point of contact for all of your title and escrow transactions. Regionally focused, our footprint consists of 69 convenient branch locations serving 58 counties throughout Idaho and Oregon, and parts of Montana, Washington and Wyoming. While we are one of the largest title and escrow groups in the Northwest, you'll find that our local emphasis is reflected in our market expertise. Committed to maintaining compliance with the American Land Title Association's (ALTA) Title Insurance and Settlement Company Best Practices, our brands are distinguished as the trusted settlement service providers in the region. When your transactions cover more than one county, Futura Title & Escrow Corp. is your regional title and escrow solution. Jenny Martin Senior VP & Corporate Business Development Director 208.955.9681 office 208.891.0481 cell Freddie Mac: Common Securitization Platform Nearly Ready In the works since 2012, Freddie Mac will test the CSP in the market as early as the end of this year. B y the end of this year, Freddie Mac may be the first company to issue fixed-rate mortgage-backed securities through the Common Securitization Platform (CSP), according to a report from Mark Hanson, SVP Securitiza- tion for Freddie Mac. Hanson said Freddie Mac also plans to move all existing fixed-rate Freddie Mac Participation Certificates (PCs) to the CSP, which will support their adminis - tration as well as new issuances. Hanson shared these two concurrences will show that the CSP is operational and sig - nal a step toward the ability to create a single fungible security guaranteed either by Freddie Mac or Fannie Mae for trade in the To Be Announced (TBA) market. The report said this goal is something Freddie Mac has been working toward with Fannie Mae under the direction of the Federal Housing Finance Agency (FHFA) since 2012. There are approximately $1.5 trillion in Freddie Mac 45-day PCs says Hanson and an estimated $1.2 trillion are convertible by PC holders into 55-day UMBS once the new security is officially launched in 2018. The single security has been christened the Uniform Mortgage-Backed Security (UMBS), while commingled resecuritizations of UMBS will be called Supers and are the single security counterpart to Freddie Mac's Giant PCs. The report sited UMBS and Supers with the ability to transform the separate multi-trillion dollar TBA markets for Freddie Mac and Fannie Mae mortgage securities into a single $4 trillion-plus market. This would be second in size only to the global market for U.S. Treasuries. The upcoming Freddie Mac security is - suance administered through the CSP will accomplish two goals, said Hanson. First, it will provide tangible proof that the platform works; and second, it will end the develop- ment phase of the FHFA Single Security update called Release 1. During Release 1, Freddie Mac said it com- pleted joint system-to-system testing to ensure the functionality of the CSP platform's mod- ules for data acceptance, issuance support, bond administration for fixed-rate bonds, and other critical functions related to Freddie Mac PCs and Giant PC issuance. Additionally, Release 2 will take place in 2017, when both Freddie Mac and Fannie Mae will undertake additional testing of the CSP modules for issuing and administering their respective single- and multi- class mortgage-backed securi - ties. Fannie Mae will move both fixed-rate and ARM securities to the platform. This is the largest dimension of Release 2. Both companies will test the capability of the platform to support commin - gled resecuritizations with the goal of achieving operational readiness by 2018. Hanson also notes that Freddie Mac and Fannie Mae continue to align their processes and disclosures as directed by FHFA in preparation for the single security. Specifically, Freddie Mac and Fannie Mae most recently communicated the finalized fea - tures of the single security and jointly issued the single security disclosure specification, including field names and layouts and new exchange disclosure elements. Freddie Mac announced plans recently to adopt the Single Security disclosure format in the Freddie Mac Disclosure Guide by the summer of 2017, the report said. This new disclosure layout will be applied to Freddie Mac's existing securities. This will facilitate consistency between current 45-day securities and new 55-day UMBS. The report said this goal is something Freddie Mac has been working toward with Fannie Mae under the direction of the Federal Housing Finance Agency (FHFA) since 2012.

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