Instead of larger, multi-issuer uniform MBS pools, FHFA wants seller/servicers to closely monitor the prepayment speeds of their broker/correspondent channels to ensure closer alignment of Fannie/Freddie pools.
The key factor for TBA investors is prepayment speeds. A quick scan of the FHFA data show that the conditional prepayment rates for UMBS issued by Fannie and those issued by Freddie have remained comparable since the launch of the single security in June.
The Fannie/Freddie JV in charge of the uniform MBS has a new CEO with a deep background in mortgage finance: Anthony Renzi. In early 2018, he was hired to run the day-to-day operations of Cenlar, the big kahuna of subservicing.
In a bid to ensure the GSEs maintain oversight of UMBS prepayment speeds and alignment, the FHFA is seeking feedback on all policies that might affect fungibility and the viability of the TBA market.
All eyes are now focused on the TBA market to see if the new single security from Freddie Mac and Fannie Mae creates the expected bump in liquidity and efficiency.
The Securities Industry and Financial Markets Association last week voted “by a substantial majority” to approve the uniform MBS for delivery into the crucial to-be-announced market. The announcement followed months of uncertainty about whether the influential trade group would endorse the single security.
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