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March 10, 2017  

Head of Agency Initiative Shown the Door

The founder of the Common Securitization Platform has been dismissed.

A source close to the matter described a situation in which Adam Newman was forced out of his role as chief operating officer of Common Securitization Solutions, a joint venture between Fannie Mae and Freddie Mac that oversees the program from Bethesda, Md. Taking over most of his responsibilities is Al Barbieri, a senior vice president in Fannie’s capital-markets technology unit.

The source said Common Securitization Solutions chief executive David Applegate sought the change with a go-ahead from the operation’s board, which consists of two representatives from Fannie, two from Freddie and one from the agencies’ regulator, the Federal Housing Finance Agency. The source characterized the move as singling out Newman for what Applegate saw as a lack of progress in the Common Securitization Platform’s development and related cost overruns.

Prior to joining Fannie in 2010, Newman had a background in developing new businesses outside the mortgage-finance industry. He proposed the creation of the Common Securitization Platform in 2011 and headed the initiative under the FHFA’s watch from 2013 to 2014, at which point he took the chief operating officer role at Common Securitization Solutions.

Applegate, a former GMAC chief, arrived from mortgage lender Homeward Residential around the same time.

The Common Securitization Platform originally was intended to centralize all issuing, payment, servicing and reporting functions for agency and non-agency mortgage bonds. But the sprawling and deeply secretive project was scaled back in 2015 to focus on the creation of a shared issuance, back-office and data-management program for Fannie and Freddie — whose servicing functions would remain separate.

Still, Common Securitization Solutions, Fannie and Freddie have yet to overcome undisclosed delays in developing the technology needed for all of those tasks. Meanwhile, Common Securitization Solutions’ expenditures have approached $500 million — a figure that climbs to almost $1 billion after direct outlays from the agencies are taken into account.

Costs in particular could receive more attention going forward, as Republican lawmakers renew efforts to cut government support of Fannie and Freddie under the Trump Administration.

The Common Securitization Platform also has been beset by a reluctance on Fannie’s part to share proprietary information, as well as concerns at the agency that bonds sold through a single-security program would price at higher yields than those it currently issues. Fannie has continued to resist despite an order to cooperate from FHFA Director Mel Watt.

In November, Freddie brought data-management and bond-administration functions for its agency mortgage securitizations onto the Common Securitization Platform. But technology delays are clouding projections for when it might begin issuing through the program, despite a current target date of 2018.

The FHFA also maintains a target of 2018 for Fannie to start using the Common Securitization Platform — a timeframe that industry participants are viewing as a placeholder in light of the agency’s opposition to the effort.