What does the Callable feature exactly means in a Callable MBS ?At first I thought it was similar to an Issuer Call as for a bond or CB. But as the issuer may prepay at any date, Prepayment and Call seem redundant...

Callable MBS make sense for the issuer for 2 reasons:1. the yield curve is not usually flat, but steep. So the refi's may not be efficient for a 30 yr. mortgage holder, but calling the cash flows, at par, as the normal turnover rates cause expected cash flows of specific tranches to run down a steep curve may make sense.2. The prepayments are not efficient, because they have refi cost, time to refi and general indifference.But in this market the mortgagees may have more info than the issuer can model. The mortgagee know about their ability or lack of ability to refi and their willingness to give into the tempation to excercise the mortgagees put option if they are too far under water and foreclose.