FHFA Single Security Proposal Could Save Taxpayers Hundreds of Millions Annually

In a letter sent to the Federal Housing Finance Agency (FHFA), the Financial Services Roundtable’s (FSR) Housing Policy Council (HPC) voiced its support for the agency’s proposal to create a single security to be issued and guaranteed by Fannie Mae and Freddie Mac.

“A single security would benefit the housing finance market, consumers, investors and taxpayers,” wrote HPC President John Dalton in the letter. “A single security would minimize, if not eliminate, some of the pricing inefficiencies in the market and save taxpayers hundreds of millions of dollars per year, which Freddie Mac currently pays to originators in order to maintain market share.”

When the government-sponsored enterprises (GSEs) emerge from conservatorship or GSE reform legislation is enacted, the proposal would also help the process of easing new entrants into the market. HPC also urged FHFA officials to establish the single security in a timely manner and not link it to the launch of a common securitization platform (CSP), which would slow the implementation process and delay benefits for taxpayers.

HPC’s letter also stressed the need for a gradual transition period to “ensure that the transition to a single security is conducted properly and does not disrupt the market for agency mortgage backed securities.”  HPC said that the single security and the common securitization platform can be developed concurrently and that the creation of a single security does not necessarily have to wait for completion of the CSP. HPC also encouraged FHFA and the GSEs to seek regular input from all stakeholders in developing the single security.

FSR, HPC and its member companies are committed to continue collaborating with lawmakers and the federal government to ensure the nation’s financial system remains strong, safe and promotes the growth of the American economy.