Submitted via email to: [email protected]
November 16, 2018
Robert Ryan
Acting Deputy Director, Division of Conservatorship
Federal Housing Finance Agency
400 7th Street, S.W.,
Washington, DC 20024
Re: RIN 2590-AA94, Uniform Mortgage-Backed Security Proposed Rule
SIFMA is pleased to respond to FHFA’s Notice of Proposed Rulemaking (NPR) regarding the implementation of the Uniform Mortgage-Backed Security (UMBS). We appreciate the continuation of the dialog between the FHFA and the MBS market. As FHFA knows, SIFMA has been an active and highly engaged participant in this dialog over the last five years, and shares FHFA’s goal of a well-functioning and liquid secondary market.
The NPR mentions the effect on competition and suggests that boosting competition between Fannie Mae and Freddie Mac would have “potential benefits to mortgage rates and the availability of mortgage credit”. We agree but also believe that we must strive to prevent competition from degrading the value of MBS which in turn will lead to higher costs to borrowers.
We have identified three aspects of the NPR that should be strengthened so as to reduce risks that the launch of single security fails to achieve our shared goals of the enhancement of liquidity and the continuation of the benefits to borrowers that the TBA market currently provides. We believe that these issues can be addressed without significant burden, in a manner consistent with the practical constraints previously outlined by FHFA and the GSEs, and describe our suggested approaches below.
We understand the timetable for the proposed launch of UMBS; however we think it is critical that these outstanding issues be addressed before the launch. They are that critical to the success of single
security initiative.