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Regulators take the last step toward SIFMA approval of UMBS

| March 1, 2019

This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors.

The last big thing standing between years of preparation for a uniform MBS and its official launch on June 3 is approval of the new security by SIFMA for delivery into TBA contracts. SIFMA asked Fannie Mae and Freddie Mac’s regulator for a rule to keep prepayments between the agencies aligned, and last week the regulator delivered. A tally of SIFMA’s asks and the regulator’s offers suggest the industry group got its wishes. TBA approval is likely right around the corner.

The Federal Housing Finance Agency in September put out a draft version of its rule and asked for comment. SIFMA responded with a detailed letter asking for specific changes. Since SIFMA’s Securitization Committee sets guidelines for the TBA market, a decision not to approve uniform MBS for TBA delivery would block the new security’s launch. A list of things SIFMA asked for and the things offered in FHFA’s final rule released on February 28 suggests FHFA met most of SIFMA’s demands. That should clear the way for SIFMA approval.

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