Fannie Mae and Freddie Mac Launch New Uniform Mortgage-Backed Security (UMBS)
Today, Fannie Mae and Freddie Mac begin issuing the long-awaited Uniform Mortgage-Backed Security (UMBS). The Federal Housing Finance Administration (FHFA) conceived of this new standard in its 2012 “A Strategic Plan for Enterprise Conservatorships,” which marked the start of the Single Security Initiative (the history of which is laid out in the graphic below).
RiskSpan produces FHFA’s quarterly performance reports, most recently published Wednesday, May 29, which will support the agency’s oversight of the UMBS. The FHFA uses this report to monitor prepayment performance of passthroughs issued by Fannie and Freddie. These reports provide market participants with additional transparency on prepayment behavior alignment. They also allow the FHFA to monitor and address differences in conditional prepayments rates (CPR) between the two issuers and to align programs, policies, and practices that affect the cash flows of “To-Be-Announced” (TBA)-eligible Mortgage-Backed Securities (MBS).
The importance of RiskSpan’s contributions to the FHFA’s efforts are highlighted in Bloomberg’s May 30 article, “A $4 Trillion Plan Could Make or Break Dreams of U.S. Homebuyers”.