Fannie Mortgage Bonds Slump on Change of Refinancing Guidelines

Fannie Mae and Freddie Mac mortgage bonds slumped as the Federal Housing Finance Agency announced changes to guidelines for the government-supported companies’ refinancing program affecting so-called underwater borrowers.

Fannie Mae’s 6 percent, 30-year fixed-rate mortgage securities underperformed U.S. Treasuries by 0.36 cent on the dollar as of 9:15 a.m. in New York, the most since Sept. 8, according to data compiled by Bloomberg. The bonds, whose underlying loan rates average about 6.5 percent, trimmed earlier relative losses of almost 0.7 cent.