Agency RMBS are securities collateralized by residential fixed rate mortgage loans, adjustable rate mortgage loans or derivatives thereof. Payments of principal and interest on Agency RMBS are guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac. Our investments in Agency RMBS generally take the form of either.
Specified Pools or TBA contracts. Specified Pools are Agency RMBS collateralized by loans that have similar characteristics, such as loan balance, FICO score, loan-to-value ratio or geography. Specified pool prepayment speeds are generally more stable than generic RMBS pools.
To-be-announced forward contracts (TBAs) are agreements for the purchase (long notional positions) or sale (short notional positions) of Agency RMBS. TBAs may be used as a means of deploying capital until targeted investments are available or to take advantage of temporary displacements, funding advantages or valuation differentials in the marketplace.
Agency RMBS are financed primarily through repurchase agreements.