With increased prepayment risk, not to mention higher dollar prices, investors should consider passthroughs backed by FHA/VA reperforming mortgages that have been purchased out of GNMA pools, analysts said, as these loans have weathered at least one serious delinquency.

This growing segment of the MBS market offers significant call protection, as the borrower has only a limited ability to refinance given a history of delinquent payments, said a report by Nomura Securities International, Inc.

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