New, stricter guidelines for interest-only adjustable-rate mortgages at Fannie Mae could further limit the voluntary prepayment volatility of its existing guarantee book, according to a recent report by FTN Financial.

"The potential impact on voluntary speeds could be quite large, as almost 80% of all Fannie Mae IO ARMs have LTV ratios above 70%," FTN Financial said in the report.

"All of these loans will not be eligible for refinancing under the stricter purchase guidelines," the report said.

There also are loans in this category with new credit score parameters but this "does not affect nearly as many loans as the LTV threshold," FTN Financial said. "However, taken together, these new, stricter guidelines should have an significant (downward) effect on voluntary speeds for Fannie Mae hybrid ARMs with IO features."

In other recent prepayment forecasts, Barclays Capital analysts said last week that its researchers expect that in the next prepayment report "a 1.5-day drop in day count, diminished refinancing activity and a lower buyout pipeline should push down [Freddie Mac] Gold paydowns by 15%-20%.

Speaking of diminished refinancing activity, Credit Suisse researchers, in a report last week, note that "despite the recent rally in Treasury rates, origination has not picked up due to two factors: 1) mortgage rates have been sticky as both the MBS basis to Treasury and primary/secondary spreads widened in the flight-to-quality rally. 2) Past experience has indicated that, for repeated rallies into the critical zone (below 5% in mortgage rates), there is an incrementally lower origination response."

Note that the Freddie Mac primary rate report last week showed that while the average 30-year rate has hit a low for the year at 4.93%, it was lower-4.81%-as recently as Dec. 3, 2009.

Thirty-year rates would have to fall to 4.5% or lower to expose to refinancing pressure a relatively high volume of outstanding mortgages that have not had a chance to refi in some time, according to John Walsh, president of Total Mortgage Services.

So aside from what FTN Financial analysts in their recent prepayment report called "modest buyout risk" for agency and government MBS, the company's researchers said they "expect future speeds to remain subdued."

"Both GSEs have stated their intention to continue to buy out loans as they become 120-plus days delinquent," the researchers said. "Ginnie Mae buyouts continue as well."

The most recent month "brought the first clean comparison between Fannie Mae and Freddie Mac's spike speeds," Barclays' researchers said, noting that speeds matched expectations for faster Fannie Mae prepays relative to Freddie Mac's.

Differences between the two are "likely to increase" going forward "because Fannie Mae has a large number of loans that are nonconsecutively 120-plus days delinquent or in workout," Barclays said.

"These are not included in Fannie Mae's buyout plan but should keep its roll rates and buyout speeds elevated relative to Freddie Mac's.

"Fannie Mae's data also seem to suggest that not all the 120-plus consecutive delinquencies at the end of March were bought out in April."

Barclays' researchers said that while they expect both Freddie Mac paydowns and voluntary Fannie Mae prepays to slow going forward.

For some Fannie Mae securities a pickup in buyouts should "more than offset" this, the researchers said.

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