Single GSE Security Release Date Set

Fannie Mae and Freddie Mac (the GSEs) have each issued birth announcements for their long-anticipated Uniform Mortgage-Backed Securities (UMBS).  The two companies will begin issuing the UMBS on June 3, 2019.

Their announcements follow publication of a final rule governing the security from the Federal Housing Finance Agency (FHFA), the GSEs' conservator, on February 28.  That was followed by a decision earlier this month from the Securities Industry and Financial Markets Association (SIFMA) To-Be-Announced (TBA) Guidelines Advisory Council approving revisions to good delivery guidelines for the UMBS. 

The SIFMA decision allows both GSEs to begin delivering forward June UMBS trades with trade dates on or after March 12, 2019 and settlement dates on or after June 3, 2019.   Existing Fannie Mae securities that were good delivery for its TBA prior to June 3, 2019 will be good deliveries for the UMBS TBA but the decision affects Freddie Mac's securities differently.  The company says it is set to issue its first 55-day TBA-eligible UMBS on June 3 and will cease issuing its new Gold PCs with a 45-day payment delay after May 31, 2019.  Existing Gold PCs have been ruled not eligible under the SIFMA guidelines and must be exchanged for 55-day mirror securities, a process Freddie Mac says will begin on May 7.

The single security will be issued via the Common Securitization Platform (CSP), a technology and operational platform operated by Common Securitization Solutions, a joint venture of the GSEs formed in 2014. The CSP will perform many of the core back office operations for the single security, as well as most of the GSEs' current securitization functions for single-family mortgages.

The UMBS composition will be governed by Chapter 8 of SIFMA's Uniform Practices Manual.  It details the size of pools within each security, maturities, rate adjustment procedures, payments to investors and other factors.