Apr 26, 2019

Are you ready for uniform MBS? (Part 2) »

Yihai Yu

Aligning prepayment speeds of Fannie Mae and Freddie Mac securities presents a major challenge to the success of uniform mortgage-backed securities (UMBS), which the two government-sponsored enterprises will launch on June 3.

Apr 8, 2019

Are You Ready For Uniform MBS? (Part 1) »

Yihai Yu

Fannie & Freddie will conclude Single Security Initiative (SSI) June 3, 2019, creating a single to-be-announced (TBA) market & a new TBA security: the uniform mortgage-backed security (UMBS)

Feb 7, 2019

How mortgage fees affect rates and spreads »

Yihai Yu

How could potential changes in U.S. mortgage policy and possible long-term industry trends affect mortgage-related fees and rate spreads?

Nov 21, 2018

Managing MBS risk in a rising rate environment (Part 2) »

Yihai Yu

Will U.S. homeowners slow down the heady prepayment rate on their mortgages — even if interest rates remain unchanged, thus potentially harming returns of mortgage-backed securities (MBS) and extending the duration of these securities?

Sep 17, 2018

Managing MBS risk in a rising rate environment (Part 1) »

Yihai Yu

Bond investors lost $1 trillion during “the great bond massacre”1 of 1994, which was triggered by the Federal Reserve’s aggressive tightening of interest rates. Many U.S. mortgage-backed securities (MBS) investors and broker-dealers misjudged the risk that fixed-rate prime mortgage borrowers would defer prepayments due to market conditions. This risk — known as “extension risk” — means that borrowers may hold onto mortgages longer than previously expected.