MBS investors are likely to charge a pay-up for securities backed by mortgages underwritten with VantageScore — at least until they’re confident prepayment speeds won’t accelerate.

Policies put in place during the pandemic prevent many small banks and credit unions from selling small-balance loans to the GSEs, which constrains mortgage lending in rural and low-income communities.

For MBS investors, the biggest complication in the GSEs’ implementation of VantageScore 4.0 is likely loan-level pricing adjustments.

One of the GSEs has quietly issued an MBS comprised of loans underwritten using VantageScore 4.0.

The shift from senior subordinate securitizations to predominantly fully guaranteed securitizations is expected to increase revenues for Freddie’s multifamily business.

Fannie Mae and Freddie Mac appear to be using aggressive pricing at the cash window to boost whole loan purchases, then retaining the most attractive coupons.

A mortgage with a prepayment penalty might be as much as 65 basis points cheaper for borrowers, according to GSE shareholder Bill Ackman.

Freddie sets an end date for investors to exchange legacy securities for those created as part of the single security initiative.

The prepayment rate on agency MBS hit a high for the year in September and that’s expected to be topped again in October. Analysts note that their prepayment models are off due to changes in lenders’ practices.

Neither Fannie nor Freddie issued any green bonds in the third quarter, though social bond issuance has been relatively healthy.