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Fannie Keeps the Mortgage Market Off-Balance |
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Written by Paul Jacob
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Fannie’s Monday announcement giving details about the impending “catch-up” buyouts of delinquent loans may have been intended to calm the passthrough market. It didn’t. The disclosure, which projected the volume capacity and intended priority of the buyouts, did go a long way towards helping the market value current and future months pricing for premiums. But we think significant price discrepancies still exist in front-month rolls and swaps; we also think Gold-Fannie swaps don't at all reflect longer-term differences in credit quality and involuntary prepayments. |
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Fannie and Freddie Call in the Cleanup Crew |
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Written by Paul Jacob
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Fannie and Freddie roiled the MBS market last week by announcing that they would buy “substantially all” (in Freddie's language) of the loans that are 120+ days delinquent out of MBS pools. Freddie’s announcement indicated a one-time burst of prepayments that will hit the March prepayment tape (i.e., holders of record at the end of Feb). Fannie’s was more ambiguous, but the effect will start in April (one month after Freddie) and last for “a few month[s]”. Needless to say, the high coupon passthrough market has been all over the place (below). |
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