|Fannie Mae Rescinds MBS "Cleanup Call"
Will Eliminate Cleanup Call Provisions on All Fannie Mae MBS
WASHINGTON, DC (April 12, 2002) -- Fannie Mae (FNM/NYSE), the nation's largest source of financing for home mortgages, today announced that it was rescinding all the company's April 4, 2002 mortgage-backed security (MBS) "cleanup calls" and will not exercise any further cleanup calls.
"Fannie Mae's exercise of a cleanup call on our older MBS was a business decision," said Timothy Howard, Fannie Mae's executive vice president and chief financial officer. "However, the benefit arising from that decision has clearly been outweighed by concerns investors have raised and the market confusion that has been caused. Therefore, we are rescinding these cleanup calls, and will eliminate the cleanup call provision on all our MBS."
" Fannie Mae is in the business of issuing mortgage-backed securities," Howard said. " We are always competing with others in the marketplace, and when customers say there is a concern, we listen to them and we respond."
On April 4, 2002, Fannie Mae announced a plan to exercise a cleanup call of MBS totaling approximately $1.5 billion of unpaid principal. The call was to be exercised on long-term and intermediate-term fixed-rate MBS, or on such MBS backing structured mortgage securities. The average outstanding pool balance on the MBS that were called was approximately $59,000 compared with an average outstanding pool balance of close to $3.3 million on Fannie Mae' s currently outstanding long-term and intermediate-term fixed-rate MBS backed by conventional loans.
The announcement today means revised factors will be released for all MBS covered by the April 4, 2002 cleanup call, and for all Megas, REMICS and Stripped MBS payable on the 25th day of the month that include, in whole or in part, any MBS that were included in the rescinded calls. We will be working with the Federal Reserve to ensure correct principal and interest remittances are distributed in the April 25th disbursement. The revised factors will be available at 4:30 p.m. on April 17th.
The rescission also will include MBS contained, in whole or in part, in REMICs payable on the 18th day of the month. The April 18th payments will be made based on the factors released on April 4th. However, future payments on these REMICs will be adjusted in accordance with industry practice to fully reflect the cleanup call rescission. Investors in Fannie Mae MBS with questions should call the MBS Investor Help Line at 1-800-237-8627.