The Federal Housing Finance Agency (FHFA) wants to use the best elements of both government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to develop a single common security that “will improve liquidity in the housing finance markets,” according to FHFA Director Mel Watt. Currently, Freddie MBS (mortgage-backed securities) trade at a discount to Fannie, requiring Freddie to compensate investors for the price differential which also reduces its revenue, according to nationalmortgagenews.com. The agency is seeking public comment on the transition to a single security structure, and is especially concerned about possible market disruption, as MHProNews understands. David Stevens, Mortgage Bankers Association (MBA) president and CEO, says, “The move to a single security will enable the two GSEs to compete on a more level playing field, and this competition will be beneficial to both homebuyers and lenders. Today’s announcement takes what many told us was an unworkable fantasy and brings it closer to reality.” The open comment period is set to end Oct. 14, 2014. ##

(Photo credit: Freddie Mac–globest.com: Fannie Mae–Jonathan Ernst/Reuters and Yahoo.com)