The value of Fannie Mae and Freddie Mac debt securities saw major improvement last week following the accord between Representative Richard Baker (R.-La.) and the GSEs (see story above), which caused them to richen significantly relative to everything else in the mortgage realm, including passthroughs, CMBS and home-equities.

"As a result of that we think that attentive customers are receptive to owning mortgages, hoping they would get a little push and accrete some excess return in the fourth quarter since we gave up so much in the second quarter," said an MBS investor. "So it's a bit of a payback."

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