Fed’s MBS Moves Boost GSE Supers Volume
Mike SP
Restructuring in the Federal Reserve’s portfolio of agency mortgage-backed securities yielded a new surge in second-level securitization by the two government-sponsored enterprises, according to a new analysis by Inside MBS & ABS.
Fannie Mae and Freddie Mac issued $428.04 billion of Supers deals backed by first-level uniform MBS during the first quarter of 2024. That was up 13.5% from the prior period at a time when new UMBS issuance declined by 7.9%.
Since the second half of 2023, the central bank has been consolidating its UMBS holdings through “CUSIP aggregation.” The process lowers operational risk, simplifies portfolio administration and reduces custodial costs, officials say.
According to a recently released summary of 2023 System Open Market Account activity, the New York Fed reduced the number of individual agency MBS it holds from 29,632 to 20,217. For the GSEs, much of that work involves repackaging smaller UMBS into new Supers.
For more details, see the new issue of Inside MBS & ABS.
