Blog-Don’t Agonize OverSecuritization, Plan For It

Recommendations for Success as Lenders Prepare for the Agency Shift to Securitization

In just eight months, the government-sponsored enterprises (GSEs) will begin limiting the amount lenders can commit to the cash window – a disruption that has left many agency-direct lenders feeling apprehensive as they assess their impact and consider pivoting to deliver via a securitization model.


Black Knight has had the opportunity to help many industry professionals learn more about securitization in preparation for the change, which is set to go into effect on Jan. 1, 2022. And despite the trepidation we’ve seen, our message has remained steadfast – shifting to securitization is an opportunity, not a dilemma, and those who embrace it can realize a number of unique benefits. As such, my colleagues and I have been encouraged to see so many lenders eagerly preparing. In fact, if you’re here, you’re probably one of them.


The most critical part of your planning should come down to robust communication and coordination. Think of your secondary marketing team as the nucleus of the entire process; they need to be knowledgeable, and in a position to guide the many moving parts involving both internal and external stakeholders.


Next, consider the following recommendations for success:

1. Program Teams Around the SIFMA Settlement Calendar

If you intend to securitize, the pool settlement calendar should be the central reference point in your best execution and delivery conversations. The calendar contains a wealth of information to help you manage your pooling cycles, including settlement and notification days, which allow you to dial in your own operational process to create a pool. These key dates are a critical reference point and will help teams understand the last days loans can be delivered to pools.

2. Crawl, Walk, Run to Success

It’s important to take ample time to gain familiarity with the pooling process. We recommend beginning with just a single pool for standard settlement as a learning opportunity for your organization. Then, transition into creating three to five pools in a month, including single-issuer and non-standard settlements, focusing on best practices each step of the way. By month three, you will have experienced two complete pooling cycles from start to finish and will be ready to continue expanding the share of MBS delivery.

3. Leverage GSE Relationships

Remember, the teams at Fannie Mae and Freddie Mac are there to help. The GSEs are in the unique position of gaining insight into practices and policies from some of the largest lenders in the nation, in addition to their own valuable experience. They understand lenders’ varying business models and levels of experience and can offer guidance every step of the way.

4. Work Closely With Broker-Dealers

Securitization often means more and different conversations with broker-dealer partners, as these individuals typically have relationships with investors who are interested in specific opportunities. Give your broker-dealers a heads-up on your plan to create pools, and keep them informed along the way. Sometimes, broker-dealers can suggest pool compositions that you wouldn’t have otherwise considered.


While these recommendations offer a foundation to begin your securitization journey, the most important thing to emphasize is that the process shouldn’t be intimidating. Forming your own pools is gratifying work, and if you take the time to prepare now, you’ll be well on your way once the new year arrives.

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