Despite being asked pointedly during the “Update on the GSE Single Security and Common Securitization Platform” panel at the Mortgage Bankers Association’s National Secondary Market Conference, representatives from the Federal Housing Finance Agency, Fannie Mae, Freddie Mac, and Common Securitization Solutions all said that the development of single security is still years way from implementation, without specifying just how many years that might be.
Steve O’Connor, the moderator of the panel and senior vice president, public policy and industry relations for the MBA asked the participants in several different forms for timeline for the single security and the Common Securitization Platform, but the panelists repeatedly said it is a “multi-year” project.
“This a complex project,” CSS’ chief executive officer, David Applegate, told the crowd. “We have a multi-year timeline. This is a multi-year project.”
Later, when asked again by O’Connor, Applegate said that they (the FHFA, Fannie, Freddie, and CSS) have not released a timeline on purpose.
“We have consciously decided not to put out specific dates,” Applegate said. “We’re working toward a broader horizon but we’re not discussing a timeline right now.”
Applegate added that the group will communicate a timeline eventually and will give lenders and others in housing finance ample lead time to adjust any processes that may need to be customized to the CSP or the single security.
Despite the project being years away from coming to fruition, Applegate said the CSS is “very comfortable” with the progress they’ve made in development to this point.
Applegate said that they’ve broken down the immensely complex project into smaller “bite-sized” pieces, which allows CSS to achieve smaller victories in the lengthy development process.
“I feel very confident in our abilities to manage this,” Applegate said. “We have vigorous testing schedules. We already see real functionality being deployed.”
One factor that could affect the timeline is Congress.
Robert Fishman, the senior associate director for the office of strategic initiatives at the FHFA, acknowledged the potential impact of the bill put forth by Sen. Richard Shelby, R-Ala.
Shelby’s bill addresses changes to the GSEs as well as an overhaul of mortgage lending.
“Given the inherently complicated nature of GSE reform, our sense is that if Senator Shelby’s package does include GSE measures it will likely focus on peripheral issues such as CEO compensation at the GSEs, efforts to expand the Common Securitization Platform’s reach, and Sen. Corker’s ‘Jumpstart GSE Reform’ amendment,” analysts from Compass Point Research & Trading said recently.
Fishman and Applegate also acknowledged that while CSS is wholly focused on Fannie and Freddie right now, eventually other customers could have access to the CSP.
“We need to look at ourselves as a customer service organization,” Applegate said of CSS. “Our customers right now are Fannie and Freddie and that could change over time.”
Fishman said that if Congress decides that other parties can use the CSP as well, they want to be ready for that.
“We’re focusing on it working for Fannie and Freddie right now,” Fishman said. “But we’re doing that with an eye on third-parties in the future.”
Fishman was later asked if there are plans to release the various forms of mortgage bonds (10-year, 15-year, 20-year and 30-year) in separate increments to test the waters of the CSP.
“Our current plan is to release all four forms at the same time,” Fishman said. “Bifurcating would make it take longer. This is already going to be a multi-year process. We don’t want it to be a multi, multi-year process.”