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TH E M R EP O RT | 61 SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T GSEs Continue to Work Toward a Single Security FHFA will announce a timeframe for the second release of the Common Securitization Platform this quarter. I n November, Freddie Mac reached a "significant milestone" toward the goal of a common securitization platform and a Single Security with the implementation of Re - lease 1, the first use of Common Securitization Platform (CSP) software and the implementation of CSP's core infrastructure and operations, according to FHFA Director Mel Watt. The FHFA, conservator for both Freddie Mac and Fannie Mae, outlined the next steps toward implementing the Single Security on the CSP—which it expects to do sometime in 2018— in the 2017 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions (CSS). "The 2017 Scorecard will guide Fannie Mae, Freddie Mac and Common Securitization Solutions as they continue to build on the progress that has been made over the years in meeting the goals set forth in our Conservatorship Strategic Plan," Watt said. "The goals and initiatives contemplated in the Scorecard strike what we believe is an appropriate balance between ensuring that these entities operate in a safe and sound manner while continuing to ensure that the housing finance market remains liquid and supports housing access for homeowners and renters." FHFA noted in the scorecard that "The Common Securitization Platform and Single Security are significant, multiyear initiatives, and FHFA expects these inter-related projects to remain ongoing conservatorship priorities." The performance goals for 2017 for CSS and the GSEs are to continue working with FHFA and each other to build and test the CSP and then to successfully integrate the GSEs with the CSP. The ultimate goal is to implement the Single Security on the CSP for both Fannie Mae and Freddie Mac, according to the FHFA. CSS and the GSEs, in developing the CSP, are charged with focusing on functions necessary for current GSE single-family securitization activities and including the development of operational and system capabilities CSP needs to facilitate the issuance and administration of a Single Security for the GSEs, according to the scorecard. Another goal for CSS and the GSEs for 2017 is to continue to work with each other "to obtain and utilize input from the Single Security/CSP Industry Advisory Group," the scorecard reported. With the launch of Release 1 in November, FHFA expects to announce a timeframe for Release 2 in the first quarter of 2017. Watt stated, "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." FHFA Narrows Definition of New Business Activities The rule offers a timeline for new business activity approvals and eliminates the need for banks to file an NBA notice each time they accept a new type of collateral. T he Federal Hous- ing Finance Agency (FHFA) published a final rule amending the regulations that address requirements for the Federal Home Loan Banks new business activity (NBA) notices, accord- ing to an announcement from the FHFA in December. The proposed rule, which was published on August 23, 2016, sought to modify FHFA's regula - tion establishing the process for the banks submitting NBA no- tices and the agency's subsequent review and approval or denial of those notices. Under the pro- posed rule, the banks would be required to submit an NBA no- tice only for activities that include ''material risks not previously managed by the Bank''—and also, the acceptance of new types of advance collateral will no longer fall under the definition of new business activity. The proposal called for the establishment of 30- and 80-day timelines for the FHFA to review and approve or deny the notices. "The rule is basically a house - keeping rule that holds us to a little tighter timeline for getting these new business activities either approved or rejected, and also removes a couple of catego - ries of things that we required or put some restrictions on what has to be put in as a new busi- ness activity," said Fred Graham, Deputy Director for Federal Home Loan Bank Regulation. "Under the existing rule, the Banks had to file a new business activity notice and get approval for it for anytime they decide to accept a different type of col - lateral. Now we are not going to require new business activities for different types of collateral. The banks know there are restrictions on the type of collateral they can take, but within the categories of acceptable collateral, if they start accepting a type that was accept- able that they hadn't accepted before, they no longer have to submit a notice." The FHFA revised the text of the final rule based on comments they received on the proposed rule. The proposal required the banks to disclose in their NBA notices whether the FHFA had approved the activity in question for any other bank. The banks commented that the requirement should be limited to instances where the bank requesting ap- proval for the activity is aware that the FHFA has approved the same activity for another bank. "The Banks explained that FHFA should have the most comprehensive information on which Banks have previously been approved for particular activities, and that because NBA notices, and any corresponding FHFA approvals, are not public documents, a Bank would not necessarily know whether FHFA has previously approved a given activity for another Bank," accord- ing to the Federal Register. The final rule will become ef- fective on January 17, 2018.