Freddie Mac and Fannie Mae to issue and accept UMBS

by Candyd Mendoza12 Mar 2019

Freddie Mac announced it is to issue its first 55-day Uniform, To-Be-Announced (TBA)-eligible Mortgage-Backed Security (UMBS) on June 3 in line with the Securities Industry and Financial Markets Association’s (SIFMA) Good Delivery Guidelines.

Under the SIFMA guidelines, UMBS offered by either Fannie Mae or Freddie Mac “will be deliverable into UMBS TBA Contracts for settlement,” effective June 3. Fannie Mae said it will start to accept forward UMBS trades with a trade date on or after March 12 and settlement dates on or after June 3.

Both Fannie Mae and Freddie Mac followed the recent update to the SIFMA guidelines. It allows for forward June UMBS trades to be filled with existing Fannie Mae and Freddie Mac TBA-eligible MBS or UMBS.

Starting on May 7, Freddie Mac said it planned “to offer holders of 45-day, TBA-eligible and non-TBA-eligible PCs and Giants the option to exchange their eligible 45-day securities for 55-day Freddie Mac mirror securities.” The GSE’s retained portfolio will book the first exchange transaction later this March but will stop issuing new Gold PCs with a 45-day payment delay after May 31.

Freddie Mac said the announcement is intended to give lenders and investors time to prepare for the “orderly implementation of the UMBS.”