Ginnie Mae IO Strips

I don't specifically, but don't know that I would be excited about the opportunity due to the rate. Even if you get 4% your money is tied up and you can't reinvest at higher rates if and when rates go up. If you then tried to sell you would take a hit. How can the broker "advise" you with any certainty that the securities will pay out in a few years because as you suggested in your commentary extension risk (ie much fewer prepayments thereby extending the maturity of the underlying bonds) is much higher in rising rate environments and you are not being compensated to take this risk. The rate scenario we will likely see over the next few years is a scenario many advise against when contemplating buying GNMA or MBS in general. I am not a big fan of MBS, you are not compensated for call risk (ie, prepayment) nor extension risk.

Then again many people like GNMA's, I just have other risk in my portfolio and choose not to hold them as I don't want the double whammy of interest rates increasing and having a potentially negative impact on my equity holdings and the bonds taking a hit as well when new bonds are issued at higher rates and the market devalues outstanding off the run bonds.