MBS Slowdown Less Marked for Ginnies

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed significantly among 5.5%-6.5% coupons during the June reporting period, while Ginnie Mae MBS speeds held steady or slowed only "modestly," according to the Bear Stearns Prepayment Commentary."In contrast to conventional speeds that were down 20%-25% in the largest issues, [Ginnie Mae] prepayments for the June reporting period were flat to very modestly slower across the entire coupon stack -- well above most expectations," Bear Stearns analysts Dale Westhoff and Bruce Kramer reported. They attributed the disparities between Fannie/Freddie speeds and Ginnie speeds -- which "have almost become the norm in recent years," the analysts said -- to several factors. The factors include the ability of many Ginnie borrowers to qualify for conventional financing, "more aggressive pricing and competition" for subprime loans, expansion by the government-sponsored enterprises into the alternative-A sector, and servicer buyouts, Mr. Westhoff and Mr. Kramer said. Bear Stearns can be found online at http://www.bearstearns.com.