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Home » Risk to Investors in Agency MBS Seen as Limited
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Risk to Investors in Agency MBS Seen as Limited

July 2, 2015
Clean-up calls executed by U.S. Bank on Ginnie Mae real estate mortgage investment conduits in recent years have caused problems for some investors, but industry analysts suggest that overall, the risk agency MBS investors face from clean-up calls is limited. Analysts at Performance Trust Capital Partners, an investing firm, warned recently that U.S. Bank has made about $53 million in profit the past three years by completing clean-up calls on Ginnie REMICs where the bank was the trustee. On Ginnie REMICs, trustees are allowed to complete clean-up calls when the outstanding balance on the security falls to less than 1.0 percent of the aggregate of the original class principal balance for the security. When executing a clean-up call, the trustee pays off the investors in the MBS at par. On Ginnie deals where U.S. Bank has completed clean-up calls, the REMICs have generally been trading at ...
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