WASHINGTON (Reuters) - The regulator of U.S. housing finance firms Fannie Mae and Freddie Mac on Friday moved closer to allowing the two firms to issue a common security, rejecting a series of suggested changes to the agency’s plan.
The Federal Housing Finance Agency hopes a single security will lower borrowing costs by increasing liquidity in the market for mortgage-backed securities. An FHFA official told reporters the plan had been generally well received by investors.
In a document released on Friday, the FHFA said it had received 23 letters from people in the industry that included advice and proposals over the regulator’s initial plan for a single security, which was published in August.
The FHFA listed suggested technical changes to that plan, such as requiring that Fannie Mae and Freddie Mac make loan eligibility rules more similar, jointly guarantee each other’s securities and standardize their legal documents. The FHFA rejected these and other suggested changes.
Currently Fannie Mae and Freddie Mac, which were taken over by the government in 2008 following a bailout, each issue their own securities. The FHFA aims to finalize its rules for a single security this year.
Reporting by Jason Lange; Editing by Ted Botha