FHFA Proposal Would Align GSEs’ Practices for TBA-Eligible MBS

As Fannie Mae and Freddie Mac continue moving toward a single security, the Federal Housing Finance Agency today issued a proposed rule directing the GSEs to harmonize their programs, policies and practices that affect the prepayment rates of to-be-announced-eligible mortgage-backed securities. The rule is intended to facilitate interchangeability and promote greater liquidity in TBA-eligible MBS, and would apply both to the GSEs’ current offerings and to the new Uniform Mortgage-Backed Security that will be implemented in June 2019.

The American Bankers Association has been engaged with FHFA and other industry stakeholders as FHFA’s single security initiative has advanced. The association will comment on the proposal. Read the proposed rule.