Most of us here know about the recently announced GSE buyback of loans that are 120 days or more delinquent. From what I understand they have the OPTION to buy back these loans after 120 days and the REQUIREMENT to buy them back within 24 months.
My question to the board...Is this a one time event or this a change in policy that will be repeated every month? If its going to be repeated every month then investors in MBS would have to model in higher prepayment speeds for delinquent loans over 120 days. In the past the investor could ride the government's guarantee on these loans for up to 20 more months. In the recent past were these delinquent loans typically not paid back until month 24 or were they paid back on average much sooner than this?