Mortgage-Backed Security

GSE Pass-through Players Gird for the New Year 

Two major concerns for value hang over the pass-through market right now: the anticipated end to the Fed’s MBS purchase plan March 31, 2010 and the likelihood of a sharp jump in involuntary prepayments in GSE pass-throughs (due to modifications and other foreclosure avoidance efforts and foreclosures, which trigger a buyout of the loan from the pool). Those buyouts may be facilitated after January 1 by the Fannie and Freddie’s adoption of FAS 167.