The differential in pricing between Fannie Mae and Freddie Mac MBS has widened over the past year despite a high level of refinancings and issuance. But concerns are growing that investors’ preference for Fannie mortgage-backed securities could increase even more as refinancings decline later this year, according to officials at the Mortgage Bankers Association (MBA). Both GSEs are wards of the federal government.

When there is a big drop in MBS insurance, “how do you protect the liquidity in the market for both Fannie and Freddie MBS?” asked MBA chief economist Jay Brinkmann.

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