WASHINGTON, Oct 7 (Reuters) - The regulator overseeing majormortgage finance sources Fannie Mae and Freddie Mac on Monday said it filed legal paperwork to create acommon platform for the two firms to issue mortgage-backedsecurities.
The regulator, the Federal Housing Finance Agency, said in astatement it established a new company called CommonSecuritization Solutions, LLC, as a limited liability company inthe state of Delaware. The joint venture is intended to helpsecuritize home loans and consolidate some of functionscurrently replicated by Fannie Mae and Freddie Mac.
The new company could eventually be privatized or mergedinto the government. Fannie Mae and Freddie Mac will have toabandon their separate systems.
"The filing...represents a significant milestone towardaccomplishing the goal of building a new secondary mortgagemarket infrastructure," Edward DeMarco, the Federal HousingFinance Agency's acting director, said in a statement.
Fannie Mae and Freddie Mac, which help finance more thanhalf of new U.S. homes loans, were seized by the government in2008 as mortgage losses mounted. They have drawn nearly $190billion in taxpayer aid to stay afloat while sending $146billion in dividends back to the U.S. Treasury.
The new joint securitization company, CSS, will have its ownchief executive officer and chairman, and will be funded byFannie Mae and Freddie Mac. It will create a single standard forissuing securities that could survive independently if Fannieand Freddie no longer exist.
The new company will be housed in Bethesda, Maryland and theFHFA has already signed a three-year lease for the commercialoffice space.
The FHFA has also retained a recruitment firm to findsuitable candidates for the top management positions at CSS.
- Fannie Mae
- Freddie Mac
- Federal Housing Finance Agency
- limited liability company