The joint venture that runs Fannie Mae and Freddie Mac’s mortgage securitization platform has moved away from plans to offer its services to the private-label market as well.

Common Securitization Solutions has disbanded a group of independent board members originally brought in to look into the possibility, according to the Federal Housing Finance Agency. It also has named Matthew Feldman, the retired president and CEO of the Federal Home Loan Bank of Chicago, as chairman. Tony Renzi, a former mortgage servicing executive, will remain the CEO.

“In early 2020, FHFA explored expanding the role of CSS to serve a broader market. After a nearly two-year review, FHFA determined that CSS should instead focus on maintaining the resiliency of the enterprises’ mortgage-backed securities platform,” the agency said in a press release. “This decision allows CSS to stay focused on the safety and soundness of the housing finance market and reduce unnecessary expenses.”

One group of small lenders welcomed the shift, noting that it had feared large private market players could tilt the common securitization platform toward their own ends if it were used more broadly.

“Hopefully this will put an end to the dreams of large Wall Street banks to co-opt the GSEs’ infrastructure through changes like gaining GSE charters or using the CSP to serve their own narrow financial interests instead of affordable home lending,” said Scott Olson, executive director of the Community Home Lenders Association, in a press statement.

The change in direction related to the platform is emblematic of differences between the Biden administration’s vision for the GSEs and that of the Trump administration. While the Trump administration moved aggressively to build up Fannie and Freddie’s capital buffer to private market standards and release them from the government conservatorship they’ve been in since the Great Recession, that capital rule now could be modified. That makes it less likely that the outsized presence of government-related agencies in the secondary mortgage market will change any time soon. Instead, Fannie Mae and Freddie Mac’s support for the Biden administration’s affordable housing goals have become more of a priority.

Feldman’s selection as the chairman of Common Securitization Solutions could in part reflect his experience with the FHLB-Chicago’s Mortgage Partnership Finance program, which was created in 1997 to serve as an alternative outlet for loan sales and competitor to the GSEs. The FHLBs more typically lend to member institutions by providing advances that are generally secured by portfolios of residential mortgages. Feldman retired in December 2020 from his post at FHLB Chicago, where he also had experience serving as chief risk officer and as an executive vice president overseeing operations and technology.

Feldman’s FHLB-related experience could be helpful against the backdrop of past disagreements between the Trump-era FHFA and its inspector general over whether the creation of the Common Securitization Platform and its costs were properly supervised. FHLB-style management appeals to some fiscal conservatives because these entities proved able to support community lending without having to undergo a government bailout during the Great Recession





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