The novelty of prepayment as a primary risk factor is one of the charms MBS have for foreign investors, particularly sophisticated institutional investors. That’s because it has a relatively low correlation factor with other assets.
The issue of fast prepays on VA IRRRLs refuses to die. Recently, VA mailed a warning letter to as many as 500 lenders. Inside MBS & ABS obtained a copy of the correspondence.
In a bid to ensure the GSEs maintain oversight of UMBS prepayment speeds and alignment, the FHFA is seeking feedback on all policies that might affect fungibility and the viability of the TBA market.
The agency is seeking comment on an initial draft policy guidance for accepting digitized mortgages and loan packages as underlying collateral for Ginnie MBS.
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