Wells Denies that Its Loans Prepay Faster than Others

When the prepayment rate on Freddie Mac's mortgage securitizations became higher than Fannie Mae's in a more notable way than usual in April, Wall Street researchers in New York singled out loan concentrations from two large originators as contributing to the trend.

They said those originators, Wells Fargo and ABN Amro, had loans underlying the securities with characteristics that contributed to the faster prepayment speeds in April. (When May's prepayment speeds came in, Freddie Mac's speeds were back in line relative closer to where they normally are vs. Fannie Mae's.)

So what do those two originators have to say about this?

Geoff Dreyer, executive vice president of capital markets and credit for Wells Fargo, said that he believes the April prepayment reports have led to some misunderstanding.

"Recent questions about Freddie Mac (participation certificate) prepayment speeds have led some market participants to incorrectly attribute this performance to Wells Fargo," he said, in a written statement he released through Wells Fargo's home office here. "This is not the case. In fact, so far in 2003, the aggregate prepayment speed for Wells Fargo's 30-year, fixed-rate Freddie Mac PCs has been slightly below that of the aggregate of all other issuers of Freddie Mac PCs. It is fair to say that in recent months Freddie Mac's 30-year prepayment differences would have been larger in aggregate if Wells Fargo was not a Freddie Mac issuer."

Bear Stearns analysts had said that Wells' faster prepayment rate is due to "their large loan sizes."

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