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Doug Duncan, chief economist for Fannie Mae, confirmed what I have been saying about prepay speeds. He stated that 70% of mortgagor applicants will not be able to “make the cut” given the industry’s tighter underwriting standards. I think this gives further credence to my January 6th blog (“12/31 Prepay Speeds are Overstated”) stating that the MSR industry should be using 11/30 prepay speeds for their year-end valuations. This should be a much more accurate reflection of what is going to happen.

To see the entire article, go to the WSJ online :

WSJ 1/15/2008

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