Finance

Prepays Drop as Refi Pipeline Narrows 

Prepayments seen among securitized mortgage loans slowed in May as mortgage rates ticked upward and overall eligibility for refinance narrowed, according to industry research by Bank of America and Merrill Lynch analysts. Securitized loans are considered in prepayment when they are refinanced or repaid in full. The effect for a securitization is essentially that the mortgage disappears, taking any future profitability with it, even though the loan itself doesn’t vanish. It simply moves into a new securitization.