1.   It protects lenders and large mortgage investors if the borrower defaults on the mortgage.

2.   AS more homeowners refinance, mortgage bond investors get their money back sooner than expected and must reinvest at lower yields.

3.   As more homeowners refinance, mortgage bond investors get their money back early and are forced to reinvest at lower rates.

4.   A flood of refinancings would hand some mortgage bond investors their money back sooner than expected, crimping their returns.

5.   A narrow difference between short- and long-term rates could also spur more mortgage investors to pile into Treasuries, driving yields lower.

6.   But construction is expected to start around October if financing from mortgage investor Fannie Mae comes through by September.

7.   Erratic yield swings make it harder for mortgage investors to gauge how fast homeowners will repay the underlying loans.

8.   Erratic swings in yield make it harder for mortgage investors to predict when their securities will be redeemed.

9.   Falling rates and a rising tide of early repayments hurt mortgage bond investors because they get their money back early and have to reinvest at lower rates.

10.   Faster mortgage prepayments mean mortgage investors may get back their principal faster than expected, crimping their returns and forcing them to reinvest at lower interest rates.