Annaly Capital Management Inc., the largest real-estate investment trust that buys mortgage debt, said a re-election of President Barack Obama may lead to more aggressive housing policies, including new efforts to spur refinancing among borrowers with government-backed loans.

“The way I see it is if Obama wins, then we potentially see more policy meddling,” Wellington Denahan-Norris, chief executive officer of the New York-based firm with $141.6 billion of assets as of Sept. 30, said on a conference call.

The election carries a series of implications for investors in the $5.2 trillion market for government-backed mortgage securities. Those include a potential new overseer for Fannie Mae and Freddie Mac that could further expand Obama’s refinancing push this year and a more “hawkish” head of the Federal Reserve, which in September under Chairman Ben S. Bernanke started acquiring $40 billion of the bonds a month to boost the economy, according to Bank of America Corp. analysts.

Debt yields are also at stake with a so-called fiscal cliff of spending cuts and tax increases more likely to be averted if Republican challenger Mitt Romney wins, creating less of a flight to the relative safety of benchmark Treasurys, the analysts led by Chris Flanagan wrote in a Nov. 2 report. Romney may also favor less aggressive Fed officials, they said.

Rate Outlook

Rates on new 30-year mortgages, which reached a record low 3.36 percent last month, would probably be 0.15 percentage point to 0.2 percentage point higher under Romney and 0.1 percentage point lower under Obama, the analysts said.

A Bloomberg index of yields on Fannie Mae-guaranteed mortgage bonds trading closest to face value widened about 0.04 percentage point to 1.03 percentage point higher than an average of five- and 10-year Treasury rates as of 1:15 p.m. in New York. The spread reached a record low 0.55 percentage point on Sept. 25 after the Fed expanded its purchases of the debt.

Mortgage-bond holders, who face an “uneconomic competitor” in the central bank, would also probably see an “elevated level” of prepayments continue if Obama is reelected, Annaly’s Denahan-Norris said.

Investors who bought the securities for more than 100 cents on the dollar face lower returns or losses if loans are prepaid more quickly as the principal gets returned faster at par and interest is curbed.

Prepay Slowdown

At the same time, Obama may also eventually allow borrowers to keep low-rate mortgages or transfer them to home buyers, she said. That would slow prepayments over the longer term, which can damage holders of low-coupon bonds as benchmark yields rise.

“There was a time in the past that mortgages were assumable and if house prices don’t allow for mobility in the system, I could see them instituting policy that would make it so that people could still move around and maintain a very low-coupon mortgage,” Denahan-Norris said.

Obama administration officials have told housing activists that the Federal Housing Finance Agency Acting Director Edward DeMarco would be replaced if the president is elected to a second term, after the regulator for Fannie Mae and Freddie Mac failed to allow the government-supported firms to cut balances for troubled borrowers, the Financial Times reported last month

“There are complications” to such a move given “the ideological divide” in Congress, JPMorgan Chase & Co. analysts led by Matt Jozoff said in a Nov. 2 report. Using a so-called recess appointment to make a change at the FHFA may “muddy the outlook for key cabinet positions and other nominees.”

No Equity

Under an expanded version of the federal Home Affordable Refinance Program, more than 618,000 of Fannie Mae and Freddie Mac loans to borrowers with little or no home equity were replaced in the first eight months of this year, compared with 400,024 last year, according to an FHFA report last month.

Gary Kain, the president of American Capital Agency Corp., the second-largest mortgage REIT with $102 billion of assets, said last week that refinancing policy is unlikely to change much after the election.

DeMarco and Obama’s administration have clashed more on policies such as whether to offer principal write-downs to troubled homeowners that “are not really that big of an issue” to investors in Fannie Mae and Freddie Mac mortgage bonds, he said on a Nov. 1 conference call.

“We feel more comfortable right now than we have in ages with respect to policy risk,” Kain said. “And we feel like we know the landscape that we’re facing and we think that the moving parts at this point are going to be very marginal relative to some of the things we’ve seen in the past.”