Agencies Eye Creation of TBA ARM Market

The agencies have been eyeing the possibility of creating a to-be-announced market for adjustable-rate mortgages, a Freddie Mac executive has told attendees at the Mortgage Bankers Association's National Secondary Market Conference in San Francisco.A TBA ARM market is likely to be among the main issues in the mortgage market over the next decade, said Mark Hanson, vice president of mortgage funding at Freddie Mac. He said the agencies "have really missed out" so far on ARM market share. But it is a market that Freddie Mac "very much wants to pursue," Mr. Hanson said. While speaking as part of a conference panel on "Ten Years of Change" in the mortgage capital markets, he also expressed faith in the strength of the existing fixed-rate TBA market, which has been threatened somewhat in recent times by increased specified pool trading. "It's so resilient," he said of the TBA mortgage-backed securities market, which has maintained the advantage of trading efficiently, generically, and in high volumes in ways specified pools do not.