Fannie Mae MBS Prepayments Jump

Prepayment speeds for Fannie Mae 30-year fixed-rate MBS jumped 26% to 31% in December, surprising some MBS trackers, according to a sample of Wall Street reports published Friday morning. Freddie speeds jumped by 16% to 19%. Some reports, but not all, said the ramp-up in 30-year Fannie speeds exceeded their expectations. Barclays said the increase in Fannie 30-year paydowns was surprising only in securities with 6.5% and 7% coupons and that speeds on those coupons came in slower than they had expected. Credit Suisse researchers attributed the jump in Fannie speeds to completions of modifications done under the federal Home Affordable Modification Program that were more aggressive than it anticipated. Deutsche Bank researchers said they believe the ramp-up in high premium Fannie coupon speeds reflects an amendment to Fannie's servicing guide that suspended loan repurchases of HAMP modifications in November but permitted them in December. Barclays also said the return in HAMP-related buyouts contributed to the acceleration in Fannie Mae speeds.