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Comment

By far, the major factor causing dispersion in prepayment speeds is seller/servicer practices. If the major concern in the market is unifying prepayment speeds, servicers with extraordinarily fast prepayment speeds should be removed from the pools. This would unify prepayments substantially, and in the end, offer borrowers better mortgage rates.

I do understand the concerns, however, limiting originators ability to sell loans into specified pools is not the answer. It disables various dynamics in the mortgage market. More important, it is a de minimis issue in the market vs. seller and servicer behavior.

The mortgage market is in constant evolution. Disabling the today’s pooling mechanics is detrimental to investing in this evolving market environment. This feels like an overstep and unduly so given the driving factors for prepayment disparity is simply aggressive seller/servicers.