After Fannie Mae's announcement on Friday, April 14 at 5:45 PM EST that it was rescinding the clean-up call of MBS worth roughly $1.5 billion of unpaid principal, most of the MBS market was relieved. However, some mortgage participants who undertook transactions in reaction to Fannie's earlier plan to exercise the clean-up call were understandably irate, while others were speculating as to the reasons behind Fannie's sudden change of heart.
A senior MBS market observer told ASR that there is pretty good hearsay evidence that the original decision was made without telling Fannie Mae Chairman and CEO Franklin Raines. Another possibility, he said, was Raines may have known about the move but did not fully understand the implications of the clean-up call for the MBS market. He added that people below Raines' level made "a kind of narrow economic decision to call these pools."