With lenders pushing mortgages that include a temporary buydown feature, MBS investors are pondering prepayment behavior for the loans. Expect loans with temporary buydowns to exhibit prepayment speeds similar to ARMs, according to an industry analyst.
KBRA said that third-quarter MBS issuance volume didn’t meet its expectations and will drop rapidly in the coming year. Meanwhile, both DBRS and Moody’s noted that performance is stabilizing.
Servicers will now have a shorter wait time to deliver reperforming loans back into Ginnie MBS, and the loans will no longer have to go into special RG pools. The changes are aimed at increasing liquidity for Ginnie issuers. (Includes data chart.)
The performance of MBS and ABS isn’t expected to be directly impacted by the fallout of Russia’s invasion of Ukraine in the near term; prepayment rates on agency MBS declined in February.