Timothy Mayopoulos, chief executive officer for the government-sponsored enterprise Fannie Mae, said Monday giving a timeframe for when the common securitization platform will be completed is difficult considering today's state of affairs in housing finance.
However, housing finance reform is underway in Washington D.C., and the GSEs are confident they can deal with the changes as they come, even as they differ on the level of commitment from private-label investors.
The CEO responded to an audience question during a Q&A session called, "GSE, Federal Home Loan Bank and Ginnie Mae Update." The discussion occurred during the Mortgage Bankers Association 100th Annual Convention & Expo going on right now in the nation's capital.
Mayopoulos is participating in the event, along with counterpart, Donald Layton, CEO of Freddie Mac. Layton, who did not share the stage with Mayopoulos, went first and outlined four necessary reforms currently underway.
The biggest change is the shift from an originate-to-hold to an originate-to-distribute model. "Private capital is already beginning to take over in a real, discernible way," Layton said. The advent of risk-sharing deals is helping this along, both CEOs agreed.
Layton said that whatever form housing reform and the common securitization platform may take, it will do so with appropriate timing and will not harm the infrastructure of Freddie Mac. Instead, the reform will enhance operations at the bond issuer.
He also sought to reassure audience members with takeaways such as, "We intend to provide you with the liquidity you expect for many years," and "We plan to be here for probably a very long time."
Mayopoulos also shifted into the role of reassurance chief during his speech. "Conservatorship marked the end of the old Fannie Mae, that company no longer exists and it's not coming back," he said. Mayopoulos reminded the audience that the GSEs and Ginnie Mae provided $13 trillion in liquidity in the last five years.
He did add that private investors are growing more active, as did Layton, but there is no indication that this money can support the mortgage industry before the common securitization platform is fully implemented.
"While people are understandably focused on the end state of our future system, we need to be at least thoughful about the transition," he said. "How do we get from here to there?"
"We built a prototype and [still] need to build it out," Mayopoulos said when discussing the progress toward a common securitization platform. If so, then this is still ahead of schedule by a few months.
Theodore Tozer, president of Ginnie Mae, said systems at the government-guaranteed mortgage bond issuer also are being updated in a big way. It's part of the overall modernization plan that's now two years underway.
