Variance rule

Variance rule

Specifies the permitted minimum or maximum quantity of securities that can be delivered to satisfy a TBA trade. For Ginnie Mae, Fannie Mae, and Freddie Mac pass-through securities, the accepted variance is plus or minus 2.499999 % per million of the par value of the TBA quantity.

Variance Rule

The upper and lower limits of how many mortgage-backed securities are delivered in a TBA transaction. A TBA transaction is

a forward contract on a mortgage-backed security. The seller agrees to deliver the MBSs for an agreed upon price and agreed upon date (usually 48 hours after the contract is made) but makes no guarantee as to which or how many securities are to be delivered. Generally speaking, the seller delivers the amount of mortgage-backed securities that equal the market value of the selling price at the time of delivery. However, the variance rule places a limit on how much this can vary from the market value of the securities at the time the TBA occurs. This reduces the risk for both the buyer and the seller.
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One purpose of the substantial variance rule is to limit litigation to those grounds that the IRS had an opportunity to consider and is willing to defend.
OSHA's variance web page also provides background on variance rules and instructions on how to apply for a variance.
An immediate issue here would be to take advantage of the Deed of Variance rules which state that you can alter a will within two years of the death of the father.