Former banker Matthew Feldman has been appointed chairman of the board of directors of the Federal Housing Finance Agency-control Common securitization solutions, where he will lead a transition to better align the “corporate governance structure of the organization with its core mission,” the FHFA announced today.
This main mission is to provide the infrastructure to support Government Sponsored Businesses (GSE) Fannie mae and Freddie mac in the issuance of mortgage-backed securities. Feldman was trained in banking, having served as President and CEO of the Federal Mortgage Bank of Chicago from 2008 to 2020 and before that as president of Continental Trust Co. – a subsidiary of Continental Bank.
“In early 2020, the FHFA explored expanding the role of CSS to serve a larger market,” the FHFA said in a press release announcing Feldman’s appointment as President. “After a nearly two-year review, the FHFA determined that CSS should instead focus on maintaining the resilience of the corporate mortgage-backed securities platform. The move allows CSS to stay focused on the safety and soundness of the housing finance market and cut unnecessary expenses while companies rebuild their capital.
Part of this now-abandoned ‘wider market’ plan, favored by former FHFA director Mark Calabria, included the obligation for the CSS platform to issue securities to newly chartered GSE’s proposed competitors. .
“I reiterate my recommendation that Congress remove unnecessary statutory exemptions and other benefits granted to businesses [GSEs] and grant the FHFA powers, similar to those of other financial regulators, to develop capital standards for companies and to issue new corporate charters, ”Calabria said in a statement to Congress in June 2020.
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CSS, operating under the umbrella of the FHFA, serves as an agent for the GSEs to facilitate the issuance of single-family mortgage securities and supports the issuance by the GSE of a common single MBS, known as Uniform Mortgage-Backed Security, or UMBS. “The FHA has asked GSEs to jointly develop a platform to facilitate various tasks associated with their securitization processes,” reports an April 2021 report from the Congress Research Service Explain. “GSEs have formed a joint venture, Common Securitization Solutions, which acts as a technology service provider for GSEs. “
A March 2019 report from Office of the Inspector General of the FHFA reported that its’ review of internal FHFA documents revealed that in February 2019, the FHFA [projected] a total of 2.13 billion dollars in costs for the development of the [CSS] platform and integration by companies by June 30, 2019 ”, the launch date of UMBS. The report concluded that the FHFA had not disclosed to Congress or the public what it knew of the actual and projected costs for establishing the joint securitization platform.
The recent change in direction of the FHFA, added the FHFA press release, has resulted in an exodus of independent members of the CSS board who have been “induced as part of the expansion activity of the FHFA. CSS market ”. In January 2020, CSS changed the structure of its board of directors, expanding the number of its members from four to nine members. Anthony Renzi will remain CEO of CSS and a member of the board of directors, the FHFA said.
“I have full confidence that Matt Feldman will be vigilant in overseeing this transition and ensuring that CSS focuses first and foremost on supporting the securities platform and serving its owners, Fannie Mae and Freddie Mac. “said Sandra Thompson, Interim Director of the FHFA. “I am also delighted that Tony Renzi remains as CEO given his strong leadership on CSS operations. “
Launch of GSE Fannie Mae and Freddie Mac UMBS in June 2019. The combined stock replaced Fannie’s MBS and Freddie’s Certificates of Participation (PC), allowing both GSEs to trade in the same market.
The main goal of common security is to reduce costs for GSEs and taxpayers, which stem from “the lingering difference in PC liquidity Fannie Mae and Freddie Mac,” HousingWire reported as UMBS was launched. first published over two years. There are.
“I look forward to working with the Board of Directors during this transition and I am committed to ensuring that CSS is focused on supporting businesses’ mortgage securitization activities in a safe and robust manner,” Feldman said in a press release prepared.