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» VISIT US ONLINE @ DSNEWS.COM ASF RELEASES WHITE PAPER ON SINGLE AGENCY SECURITY PROPOSAL The American Securitization Forum (ASF) released a white paper on the Federal Housing Finance Agency's (FHFA) proposed single securitization platform. The trade group says while originators and investors disagree on how to implement it, they concur that a single agency would benefit the market. The establishment of a single securitization platform is part of FHFA's strategic plan for Fannie Mae and Freddie Mac and is intended to revamp the secondary mortgage market. In its white paper, ASF examined the practices of the two GSEs and offered suggestions on how to facilitate exchangeable securities. The consensus among ASF members is that in order for the GSEs' securities to be transferable, standardization needs to occur in four key areas: loan delivery and pooling requirements; remittance requirements; underwriting guidelines and refinance programs; and servicing standards and loan repurchase policies. ASF notes that Fannie Mae and Freddie Mac have different payment dates, causing delays that affect pricing. The trade group suggests syncing both GSEs' payment dates to Fannie Mae's current structure, which pays 55 days after interest begins to accrue. Also of concern is the complexity of asset delivery to the GSEs once the single agency security program begins. While the FHFA intends to develop a new platform with updated technology that other issuers can access in the future, ASF says such a plan could take years to implement. The group says for now issuers should deliver assets to both GSEs via the channels they use to deliver to Fannie Mae, which processes a higher volume of mortgage-backed securities (MBS). Securities issued in exchange would be single agency. While the GSEs' underwriting systems are somewhat similar, ASF said they do create problems as far as exchangeability of collateral. The group suggests FHFA create a set of guidelines to govern all collateral underlying a single agency security and standardize both documents and refinance programs. While ASF originator and investor members agreed on those points, they disagreed on others. Originators say each GSE should keep its own requirements and processes for guarantee fee pricing, basing fees on their own perceptions of a seller's ability to fulfill financial obligations. Originators also said each GSE should guarantee the other's securities or the securities of the single agency. Investors, on the other hand, said individual guarantee fee pricing will allow for competition, which will in turn lead to different prepayment speeds and inconsistent performance of securities. As far as guaranteeing securities, investors said it should be identified clearly which GSE issued and guaranteed the single agency security. They also cited concerns over differing credit risks and financial positions. In the end, all members agreed that establishing a single agency would eliminate market inefficiencies and lower mortgage interest rates for borrowers. In addition, ASF speculated that standardizing the GSEs would result in less waste and lead to cost savings for taxpayers. Service This BY RYAN SCHUETTE Be confident that the industry is hearing your message. Advertise with DS News today. Call 214.525.6700 or visit DSNews.com. The House Committee on Oversight and Government Reform released a stinging report in July alleging Countrywide Financial bought political access with a VIP mortgage program for influential lawmakers, White House cabinet secretaries, and chief executives with Fannie Mae. The views expressed by ServiceThis solely reflect the views of the cartoonist and not the views of DS News, the Five Star Institute, or any affiliates. 27