Is Private Possible on a Public Platform?


In this report, we assess comments filed with FHFA on its proposed rewrite of the infrastructure supporting U.S. mortgage securitization. Critical to FHFA’s thinking is that a single platform could support an array of Fannie, Freddie, Ginnie and private-label MBS, thus giving the GSEs a new role as a securitization utility. However, our review of industry comments shows deep concern about the degree to which so large a trampoline is possible, dampening near-term prospects for turning Fannie and Freddie into the securitization utility FHFA contemplates as a post-conservatorship option. Although senior-sub structures for risk-sharing got mixed review, a lot of work is clearly under way on credit-linked notes.