Last week Ginnie Mae issued a clarification of its buyout authorization for issuers of Ginnie pools that contain loans affected by severe storms and hurricanes. This is in response to investors having questions and concerns about the impact of this buyout provision on prepayments in the sector.

"We issued a clarification on the language pertaining to buyouts as it raised some fears among investors that this would cause a dramatic increase in buyout activity," said Michael Frenz, senior vice president of capital markets at Ginnie. He added that the universe of potential loan buyouts is much smaller as Ginnie Mae will use its discretion to determine the eligibility of a loan on a case-by-case basis.

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