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GSEs Launch UMBS Today

Phil Hall
Jun 03, 2019
Photo credit: Getty Images/krblokhin

The Uniform Mortgage-Backed Security (UMBS), a new security issued through the government-sponsored enterprises’ joint venture Common Securitization Solutions (CSS) using the Common Securitization Platform (CSP), is being rolled out today.
 
“Today marks the official launch of the new Uniform Mortgage-Backed Security, a significant milestone that combines the separate Fannie Mae and Freddie Mac To-Be-Announced (TBA) markets into one, bringing additional liquidity and efficiency to the market,” said FHFA Deputy Director Robert Fishman. “By addressing structural issues and trading disparities, the UMBS will benefit taxpayers and the nation's housing finance system."
 
The UMBS is designed to replace the current offerings of TBA-eligible mortgage-backed securities. According to the Federal Housing Finance Agency (FHFA), CSS and the CSP will perform bond administration functions for about 900,000 securities backed by nearly 26 million loans under the UMBS program.
 
In March, the FHFA issued a final rule that requires Fannie Mae and Freddie Mac to align their respective programs, policies and practices that affect the cash flows of TBA MBS. This final rule applies to the GSEs’ TBA-eligible MBS and the UMBS, and the GSEs will be required to lower their maximum mortgage note rate eligible for inclusion in an MBS.
 
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