- January 28, 2019
- Bulletin No: 2019-02
Information on the Single Security Initiative
In an effort to keep our members informed of upcoming changes to the securities market that could impact members' business, the Federal Home Loan Bank of Dallas has been closely following the progress of the Single Security Initiative, a joint initiative of Fannie Mae and Freddie Mac (the Enterprises) to develop a common mortgage-backed security.
On June 3, 2019, as part of the Single Security Initiative, the Enterprises will begin issuing a new, common To-Be-Announced (TBA)-eligible security known as the Uniform Mortgage Backed Security (UMBS™). The UMBS will have common features and disclosures for fixed-rate, 30-, 20-, 15- and 10-year securities. The Enterprises are aligning their prepayment policies and practices, including monitoring factors that may influence prepayment speeds such as new initiatives and loan buyout processes. After the Single Security Initiative goes live, Freddie Mac will issue mortgage-backed securities with similar structures to those currently offered by Fannie Mae. In addition, starting on June 3, 2019, Freddie Mac will provide holders of existing TBA-eligible and non-TBA-eligible fixed-rate participation certificates (PCs) and Giant PCs the option to exchange their eligible 45-day securities for 55-day Freddie Mac securities.
The Bank is working in conjunction with the Enterprises, the Federal Housing Finance Agency and the Bank's safekeeping custodian, Citibank®, to ensure the Bank is prepared to implement the transition to the UMBS when the Single Security Initiative takes effect later this year.
For more information on the UMBS or the exchange process, visit the Enterprises' Single Security Initiative Market Adoption Playbook at http://www.freddiemac.com/mbs/single-security/. Members that choose to exchange Freddie Mac's fixed-rate 45-day PCs and Giant PCs, and which are supporting credit obligations with the Bank, may contact Banking Operations Manager Todd Nickerson at 214.441.8768 or todd.nickerson@fhlb.com to discuss alternatives to ensure the obligations are fully collateralized without impacting the exchange.
Sincerely,
Gustavo Molina
Senior Vice President and Chief Banking Operations Officer