The poor get poorer, while the......

Refinancing of Fannie Mae and Freddie Mac mortgages with the lowest interest rates soared as prepayments on loans with the highest rates declined, underscoring how only some homeowners can take advantage of the best borrowing costs on record.



The so-called constant prepayment rate, or CPR, for 30-year Fannie Mae securities with 4 percent coupons, backed by loans with rates of about 4.5 percent, jumped 140 percent last month to 17.7, according to data released late yesterday. Speeds for similar bonds with underlying loan rates averaging about 7 percent fell almost 10 percent to 19.2.


Treasury Secretary Timothy F. Geithner told lawmakers yesterday the U.S. would “move forward with a plan in the next couple of weeks” to allow more refinancing of government-backed loans for borrowers who owe more than their home’s values. Prepayment speeds last month on the lowest-rate debt show lenders may be concentrating on the safer homeowners who got loans since the housing slump slowed in 2009.

“This report underscores the trend that lenders have learned to cope with capacity constraints by prioritizing borrowers” who are the easiest to underwrite, JPMorgan Chase & Co. (JPM) analysts led by Brian Ye in New York said in a report, referring to originators struggling to deal with a surge of business after a Mortgage Bankers Association index of refinancing applications more than doubled from this year’s low.