Securities Market Update
September 21, 2018
FHLBank Topeka is aware of upcoming changes to the securities market and wants to keep our members informed of the initiative and its progress.
On June 3, 2019, Fannie Mae and Freddie Mac 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 Single Security Initiative is a joint initiative of Fannie Mae and Freddie Mac (the Enterprises), under the direction of the Federal Housing Finance Agency (FHFA), the Enterprises' regulator and conservator, to develop a common mortgage-backed security (MBS) that will be issued by the Enterprises to finance fixed-rate mortgage loans backed by one- to four-unit single-family properties.
Both Enterprises are aligning on policies and practices that influence prepayment speeds, such as new initiatives and loan buyout processes. Fannie Mae MBS will be UMBS when Single Security goes live. Freddie Mac will provide holders of TBA-eligible and non-TBA-eligible fixed-rate PCs and Giant PCs the option to exchange their eligible 45-day securities for 55-day Freddie Mac securities.
FHLBank Topeka is working in conjunction with the Enterprises, the FHFA, and our custodian, Citibank, to ensure we are prepared to implement the change to UMBS next year. We are continuing to expand our knowledge of the product and proposed processes as they are published by the Enterprises.
If you would like to know more about the new UMBS or the exchange process, visit the Fannie Mae and Freddie Mac’s Single Security Initiative Playbook. If you have any additional questions, please contact Lance Liby, Chief Credit Officer, at 785.478.8140, Kylie Mergen, Director of Financial Services, at 785.478.8203, or Elaine Shumaker, Financial Services Manager, at 785.478.8204.