The world’s second-largest bond market moved a step closer to its much-anticipated overhaul on Thursday when Wall Street firms voted to support a single mortgage-backed bond for Fannie Mae and Freddie Mac, the Wall Street Journal reported. The vote by Wall Street’s largest trade group, the Securities Industry and Financial Markets Association, is the final hurdle for the proposed new security — which is expected to launch in June as part of a revamp to the $5 trillion market in bonds guaranteed by the mortgage-finance firms. Together, the two back roughly half the U.S. mortgage market. The trade group sets the standards for what mortgages can be packaged and sold to investors. The group approved guideline changes to enable trading of the new securities “by a significant majority,” it said in a statement. The new single security will bring together two products that currently are issued separately by Fannie and Freddie. Analysts say the change is significant because it could set the stage for an eventual overhaul of the housing-finance system, featuring new competitors to Fannie and Freddie that also could issue bonds on the single-security platform.
