A council of top federal regulators is giving the GSE regulator a green light to build a new securities platform to replace the aging platforms that Fannie Mae and Freddie Mae currently use.
In its annual report, the Financial Stability Oversight Council notes that the Federal Housing Finance Agency wants to develop a new “common
And the council wants the FHFA to move ahead with this securities platform that Fannie and Freddie would build as a joint venture.
“The council recommends that the FHFA continue to explore changes to the country’s housing finance infrastructure that would lead to a more efficient and sustainable mortgage market,” according to the FSOC annual report that was released Thursday.
“In addition to the work on the common securitization platform,” the annual report says, FHFA should develop model legal agreements, make improvements to the mortgage transfer system and reform the mortgage servicer compensation system.
The Federal Reserve Board, Securities and Exchange Commission and FHFA, along with federal and state bank regulators, are members of the council that is chaired by Treasury secretary Jacob Lew.
The council also calls for a “measured wind-down” of Fannie and Freddie through higher guarantee fees and risk-sharing transactions.
“The council recommends that the FHFA continue these efforts in order to help bring more private capital back into mortgage finance,” the FSOC report says.
