MBS NOTIFICATION DAY ALERT: Monthly Settlement Process Underway. Prices to Plummet

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Posted To: MBS Commentary

Today is Class A Notification Day in the secondary mortgage market. Class A MBS coupons consist of Fannie Mae and Freddie Mac 30 year loan notes. December Fannie and Freddie 30 year fixed MBS coupon have begun the settlement process and it looks like prices just plummeted. WHY??? The MBS coupons that determine rate sheet pricing are traded in the TBA MBS market. TBA = To be Announced In the TBA MBS market, at the time a trade is made, buyers and sellers agree to a few specific terms like what coupon, the issuing agency (Fannie, Freddie, Ginnie), size of trade, and a buy/sell price....the actual pools of loans are NOT exchanged at the time of this commitment. Instead, the MBS buyer and the seller make an agreement to complete the transaction at a later date. In the MBS market this date is pre...(read more)

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Source: www.mortgagenewsdaily.com

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