Structured Finance Association Statement on New Basis Point Guarantee on UMBS Collateral

The Structured Finance Association (SFA) is gathering market feedback on the new upfront 50 basis point cross-collateral guarantee on Uniform Mortgage-Backed Securities (UMBS) underlying certain TBA securities that was announced by Fannie Mae and Freddie Mac. While the fee has not yet been implemented, this additional charge appears to undermine the purposes of the UMBS, which risks impairing the fungibility of that security and the liquidity of the broader TBA market, thereby negatively impacting borrowers. Given the rising mortgage rates and high inflationary pressures that Americans face today, we urge the Enterprises to delay and reconsider the impact of this fee on borrowing costs before the July 1st implementation date.