Freddie to Expand MBS Disclosures
Freddie Mac (FRE) said Wednesday that it will expand disclosures on its mortgage-backed securities, commonly known as participation certificates, or PCs. The GSE said that in June it will begin providing investors nine new loan-level disclosures, and will expand two existing disclosures on its single-family fixed-rate and adjustable-rate mortgage participation certificates. It will also update disclosures on PC securities issued on or after December 2005, and will begin in August providing expanded disclosures on third-party originations for newly-issued securities. The move comes as market participants have clamored recently for greater transparency, and regulators have directly suggested a need for greater disclosure in mortgage-backed securities. Both Freddie Mac and sister GSE Fannie Mae are facing increased pressure from legislators to play backstop to the troubled U.S. housing market, and sources suggested to Housing Wire that the new disclosures are one way the GSE is looking to reassure investors as it takes on a wider book of business. "Investors aren't sure what sort of debt is going to be stuffed into the GSE box right now," said one source, who said that uncertainty was part of the reason agency rate spreads remained historically high. "This might help soothe some nerves once it's in place." Fannie and Freddie, together with Ginnie Mae, have accounted for more than 90 percent of MBS issuance to start 2008. "This latest expansion of Freddie Mac's loan- and pool-level disclosures demonstrates our continued commitment to providing the market a more transparent view of our mortgage-backed securities," said Mark Hanson, vice president of mortgage funding. "These expanded disclosures are timely, particularly in light of continuing volatility in the housing and mortgage markets, and we believe they will help investors better evaluate our securities and help support our mission to provide liquidity, stability and affordability to America's home financing system." Freddie Mac's new loan-level variables include information on whether income, assets, or employment was documented or not, CLTV values, whether the loan represents a first-time homebuyer, as well as the original debt-to-income ratio. Expanded loan-level data will include information on whether the loan was originated by a broker, a retail loan officer, or a correspondent lender. For more information, visit http://www.freddiemac.com. Disclosure: The author owned no positions in FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.