With headlines from the fiscal cliff & FOMC minutes behind us, coupled with light originations and an employment report that was on the screws, mortgage have tightened back nicely (~4 tighter) and rallied in dollar price by about 20/32nds from Friday's lows. The economic calendar is very light this week, with absolutely nothing today. Most of the chatter today has been centered around B of A's settlement with Fannie as they agreed to pay the GSE 3.6billion in cash and repurchase 6.75billion of loans. This means, they will likely once again be creating Fannie MBS again, putting more pressure on the ever-widening Fannie/Freddie swap - the price spread between Fannie and Freddie mortgage-backed securities.