Why is CSS Important?
Common Securitization Solutions is a joint venture owned by Fannie Mae and Freddie Mac charged with developing, building and operating the Common Securitization Platform (CSP).
Common Securitization Platform (CSP)
The CSP is intended to function as one common, flexible technological and operational platform to support single-family securitization. These activities involve storing, processing, and transmitting large volumes of data, so that investing in a single platform and carrying out the accompanying operational capabilities to support these functions will benefit both companies, and ultimately, taxpayers.
The CSP enables Fannie Mae and Freddie Mac to implement one aligned new standard security in one common system.
The CSP Will Impact Housing Finance
The CSP is necessary for the implementation of the Uniform Mortgage-Backed Security (UMBS). The CSP enables Freddie Mac and Fannie Mae to implement one aligned new standard security in one common system rather than each of the companies building to that standard in their own legacy systems. The CSP also makes administering commingled securities much more efficient because all the data from both companies is on one platform.
The implementation of the new UMBS will lead to a more efficient, resilient, and liquid secondary mortgage market. The UMBS should also reduce or eliminate the cost to Freddie Mac and taxpayers that has resulted from the historical difference in the liquidity of Fannie Mae’s Mortgage-Backed Securities (MBS) and Freddie Mac’s Participation Certificates (PCs). The issuance of UMBS through the Common Securitization Platform (CSP) will mark full implementation of FHFA’s Single Security Initiative and will meet this strategic goal.
CSS Currently Supporting Freddie Mac Securitization
In November 2016, Freddie Mac transferred certain issuance and bond administration functions for its Gold and Giant PCs to the CSP as part of Release 1 of the CSP. The transition of securities with billions of dollars of unpaid principal balance to the platform, with no disruption of operations, demonstrated that the platform is performing as expected. Since implementation of Release 1, Freddie Mac has used the CSP for monthly issuance and settlement of approximately 1,000 new securities representing about $59 billion in unpaid principal balance, and for monthly bond administration functions related to 257,000 securities backed by approximately 10 million loans with approximately $1.7 trillion in unpaid principal balance.
CSP Being Readied for June 2019 Launch of UMBS
CSS has proven that it can run what it built. The company continues to test and refine the capabilities of the CSP so that the platform will be ready for the June 2019 launch of the UMBS. The CSP is architected with some of the most sophisticated software available today and operates at an exceptionally high performance level on one of the world’s leading cloud providers. At CSS, we’re creating and building a lasting business at the same time we’re developing and launching a sophisticated technology platform.
CSP Operations Will Benefit Housing Finance
The CSP will act as the agent for our customers and serve as the common mechanism for mortgage securitization. It utilizes an event-driven architecture following industry data practices featuring strong controls, a robust security structure and proven processes. Through the CSP, CSS will be administering $125 - $175 billion in monthly issuance volume and direct payments on over $4.8 trillion in securities.