WASHINGTON Oct 7 The regulator overseeing major
mortgage finance sources Fannie Mae and Freddie Mac
on Monday said it filed legal paperwork to create a
common platform for the two firms to issue mortgage-backed
The regulator, the Federal Housing Finance Agency, said in a
statement it established a new company called Common
Securitization Solutions, LLC, as a limited liability company in
the state of Delaware. The joint venture is intended to help
securitize home loans and consolidate some of functions
currently replicated by Fannie Mae and Freddie Mac.
The new company could eventually be privatized or merged
into the government. Fannie Mae and Freddie Mac will have to
abandon their separate systems.
"The filing...represents a significant milestone toward
accomplishing the goal of building a new secondary mortgage
market infrastructure," Edward DeMarco, the Federal Housing
Finance Agency's acting director, said in a statement.
Fannie Mae and Freddie Mac, which help finance more than
half of new U.S. homes loans, were seized by the government in
2008 as mortgage losses mounted. They have drawn nearly $190
billion in taxpayer aid to stay afloat while sending $146
billion in dividends back to the U.S. Treasury.
The new joint securitization company, CSS, will have its own
chief executive officer and chairman, and will be funded by
Fannie Mae and Freddie Mac. It will create a single standard for
issuing securities that could survive independently if Fannie
and Freddie no longer exist.
The new company will be housed in Bethesda, Maryland and the
FHFA has already signed a three-year lease for the commercial
The FHFA has also retained a recruitment firm to find
suitable candidates for the top management positions at CSS.