The big issue in the MBS market last week was the implications for the future of cleanup calls on Fannie Mae mortgage securities (see story p.13). On the previous Friday, the market was caught off guard by the surge in March prepayment speeds for Fannie Mae seasoned super premiums. For instance, 1987 8s jumped to 70% CPR from 37% CPR; and 1991 and 1987 8.5s rose to 77% CPR from the 25-40% CPR area.

Unlike Freddie Mac MBS, Fannie Mae's mortgage securities program includes various provisions for calling its mortgage-backed securities. Basically, the rules for a cleanup calls are as follows:

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