On June 3, 2019, the secondary mortgage market is set to transition to a single uniform mortgage backed security (UMBS). Years in the planning, the architect of this change, Elizabeth (Liz) Scholz, Executive at the Federal Housing Finance Agency (FHFA), expects a smooth roll-out and a successful transition from the prior practice of individual securities issued by Fannie Mae and Freddie Mac.

Liz and I sat down and discussed the FHFA strategy for the UMBS and how her background positioned her to lead this monumental effort for the industry. This interview kicks off an executive series I intend to conduct monthly to shed light on how women leaders built their careers and successfully managed an integral industry change.

The Interview

What is your current role at FHFA?

I’ve been with FHFA for almost ten years, serving as an executive in a variety of roles. Since the 4th quarter of 2017, I have been leading the Single Security Initiative for FHFA. I also have responsibility for other conservatorship duties, including a risk management function that tracks and monitors enterprise risk across both Fannie Mae and Freddie Mac.

What does the single security mean for the industry?

The UMBS is one of the most significant changes to the mortgage-backed security marketplace to take place in decades. When fully implemented, the UMBS will help create a more liquid, fungible and transparent security, which will be good for the housing finance market and the public at large.

Given the significance of this change, what are your expectations for implementation? Along those lines, how did you prepare the industry for this change?

The Enterprises have conducted extensive outreach to prepare investors, dealers, vendors, software providers, custodians and many other stakeholders over these past two years. Market participants have been updating their operations and compliance functions in order to be ready for the June 3 implementation. There is a high level of confidence that the industry is ready.

As you planned this transition to a single security, did you hear feedback from the industry on how respective GSE pricing could be affected?

Generally the benefits of broad market liquidity should be valuable to the industry in many ways such as more flexibility in UMBS pool formation, hedging and trading. In pricing, I’m assuming you mean the guarantee fee levels, the pricing at the guarantee fee level is really more the function of an assessment by Fannie Mae and Freddie Mac of various risks, capital required and other costs that should be charged at a loan level.

Liz, you have experience with new initiatives and introducing new products throughout your career. What were some of the impacts of most transformational initiatives?

Earlier in my career, I designed and launched new products for Fannie Mae including managing the first ever release of a 97LTV product. Fannie 97 was a large and high impact initiative, and at the time, there was a lot of complexity and moving parts. I was fortunate to be able to play a key role in designing and launching the product. The initiative kept me on the edge of learning a lot, practically drinking from a fire hose, while gaining the satisfaction of accomplishment, which I valued. I also recall, in hindsight, what a great group of colleagues I had to work with. This reminds me that transformational initiatives need lots of healthy teamwork, and good leadership, both internally and externally. Many were proud and delighted to see the Fannie 97 product launch announced on the front page of USA today.

I recall you worked with artificial intelligence in your postgraduate academic work. Can you tell me about what you find interesting in the current landscape of machine learning and big data?

Yes. I started pre-doctoral work in artificial intelligence at George Washington University long before the topic was popular. In one class, we built a very rough rules-based application to evaluate mortgage loan applications. In other classes, we covered futuristic applications, like the notion of putting chips in your head to read how you are feeling and other “out there” concepts. Back in those days, I thought it looked impossible to be able to perfect voice recognition technology … (don’t tell Alexa) … it has been remarkable to see the evolution of intelligent applications over the past decade. I am especially conscious of the transformation of skills needed in data and programming across disciplines in today’s environment. I recently spoke with a data scientist in the health care industry; he thinks that the subject matter expert role and the data scientist role will eventually merge. It has been interesting to read more recently about the risks of biases in machine learning and how that might impact the landscape of the future.

What advice would you give to young women entering the workforce when it comes to seeking opportunities and growth in a career?

What I tell my daughter currently wrapping up her first year of college. Find things that interest you, that you can make a living from and that you can be happy with. Make mistakes, it is a sometimes hard but great way to grow and learn. Hard things payoff, don’t run away from them. Take calculated risks, try new things. Find your niche of colleagues, a community matters on so many levels beyond careers. Networks grease the wheels and open doors, do it even if it makes you uncomfortable. If you get knocked down seven times, get back up eight … seek out people who can and will mentor or support you. Help others, big and small, you’ll get more than you give. Above all, laugh and have fun, life is short.

Liz, as you look back, what do you think has been helpful in your career, and what would you have done differently, if at all?

I tried to educate myself (BA and MBA through night school while working demanding jobs full time) so that I could constantly improve my technical and interpersonal skills. Nonstop learning is a passion of mine. While I have no regrets, in younger days, I was probably too insecure, inexperienced and shy to figure out how to better cultivate networks, find more mentors and/or sponsors that could have helped me learn and grow. That said, I have appreciated support and help from many colleagues throughout my career, there have been many, and I am grateful.


At Housing Finance Strategies, we are leading change in all things housing. By interviewing key executives like Liz Scholz, our intent is to educate and encourage the industry to constantly grow and evolve. And take a lesson from Liz, take chances, get up that 8th time and lead change.

As our alliance with NEXT Mortgage grows, we are focused on a series of initiatives to foster growth of women leaders. What a great example we have this month with Liz Scholz.

To learn more about the Uniform Mortgage Backed Securities initiatives, take a look at this video featuring Liz and this blog from FHFA.

FHFA Blog Post: Counting Down to Launch of the UMBS

Grow, lead and mentor your peers!


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