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The FHFA released the white paper on Oct. 4, and said that developing a new securitization infrastructure is a key goal of the its Strategic Plan for Enterprise Conservatorships. The White paper builds on other initiatives already underway to align and improve the business practices of Fannie Mae and Freddie Mac.
The key issue the white paper seeks to identify is the core components of mortgage securitization that will be needed in the housing finance system going forward. Those core components are linked to two cornerstone operational features: a securitization platform to process payments and perform other functions that could be used by multiple issuers; and a contractual framework supporting the new infrastructure.
“The release of this white paper is an important step laying the groundwork for the future structure of the housing finance system,” said FHFA Acting Director Edward J. DeMarco. FHFA is requesting public input which must be received by Dec. 3, 2012.
The American Securitization Forum executive director, Tom Deutsche, yesterday said in a press release that some of the FHFA's proposed platform could be helpful to private-label issuance. ASF members have already shown great support for standardizing the operations and requirements of the GSEs in the industry's single security white paper published last July. And through the ASF's project RESTART, members have collaborated over the last four years to develop market standards and practices for the private label securitization market.
"We applaud the FHFA for its efforts and look forward to working with the Agency to progress its efforts," said Deutsche. "Given that still over 90% of mortgages made in America are guaranteed by the American taxpayer, the return of private capital to the mortgage market continues to be an elusive target."
However the ASF warned that a one-size-fits-all regulatory regime for the private market, could stifle innovation and would essentially "prevent issuers and investors from working together to meet each other's origination and investment preferences."
