The two government-owned entities that together make up the majority of secondary market for mortgages in the U.S. have been in effect owned and managed by the federal government since they were conserved during the housing finance crisis.
The Federal Housing Finance Agency, the organizations’ effective regulating and managing agency, announced Oct. 7 the formation of a new, independent, corporation to run the new MBS market. Its name: Common Securitization Solutions, LLC
The FHFA also announced Fannie and Freddie have rented space for the new corporation’s headquarters and have started a process for recruiting a CEO and chairman for what it called a Board of Managers.
The new corporation filed a Certificate of Formation with the Secretary of State of Delaware, where the new corporation will be established, though the space for the headquarters has been rented in the Washington, D.C., suburb of Bethesda, Md.
“The filing of the Certificate of Formation represents a significant milestone toward accomplishing the goal of building a new secondary mortgage market infrastructure,” said FHFA Acting Director Edward J. DeMarco. “We are pleased with the progress being made and look forward to further developments.”
DeMarco first outlined the role for the new corporation during a March 4 speech at a National Association for Business Economics conference.
“We believe that setting up a new structure that is separate from the two companies is important for building a new secondary mortgage market infrastructure,” DeMarco wrote in the speech›s prepared remarks.
“Our objective, as we stated last year, is for the platform to be able to function like a market utility, as opposed to rebuilding the proprietary infrastructures of Fannie Mae and Freddie Mac.”