Fannie Mae-No Politics (FNMA)

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Forced Implementation of the CSP

The forced implementation of FHFA thought of “it would be nice to have the CSP” will come with repercussions, the whole forced thing is out of the boundary statue of FHFA, even though the GSE’s are “sponsored”, it does not mean the government (thru FHFA) can force anything upon FnF as they like, and not pay for it, and since nothing is specified in the 2018 annual report, it will be hard for the government to claim anything on it(good work FnF),as we go live in 2019 , so now we have a platform that is used by FnF with only FnF MBS’es, so basically everything is the same as before, only the cost has gone up significantly, but nobody knows how much exactly, and when others want to enter (first congress need to approve the details of entering) FnF can charge a fee based on the CSP building and maintaining costs when they are released, if the government forces other parties to enter they will have to pay for the initial cost and maintaining cost of the CSP which cannot be determined as is it not plausible to release initial cost after it is build, so that will be a tough one for the government to accomplice, an independent platform that they did not build themselves, so FnF keep control of the overall market, for decades to come

In 2014, FHFA directed Fannie Mae and Freddie Mac to develop a single common mortgage-backed security that will be fungible with then-outstanding Fannie Mae guaranteed mortgage pass-through certificates and that will be exchangeable by Freddie Mac for then-outstanding Freddie Mac PCs. FHFA’s Single Security Initiative is intended to maximize liquidity for both Fannie Mae and Freddie Mac mortgage-backed securities in the TBA market. In March 2018, FHFA announced that Fannie Mae and Freddie Mac will start issuing UMBS in place of their current offerings of TBA-eligible mortgage-backed securities on June 3, 2019. The new UMBS will be issued by Fannie Mae and Freddie Mac through their joint venture, CSS, using a common securitization platform, or “CSP.”…………………..Furthermore, if we are no longer in conservatorship, it is unclear whether we may continue to align our program, policies and practices with those of Freddie Mac in support of UMBS………… Our business activities could be adversely affected and the market for Fannie Mae MBS could be disrupted if the CSP were to fail or otherwise become unavailable to us or if CSS were unable to perform its obligations to us. ……………………., and could adversely affect the liquidity or market value of our MBS. See “Our concurrent implementation of multiple new initiatives may increase our operational risk and result in one or more material weaknesses in our internal control over financial reporting” for a discussion of other operational risks associated with our implementation of the Single Security Initiative and related internal infrastructure upgrades.

http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2018/q42018.pdf