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[Getting Graphic] Stressing Subprime Mortgage Rate Resets

Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Source: Fannie Mae


With all the discussion about the doubling of the foreclosure rate last month [1] as compared to the prior month (based on RealtyTrac [2]‘s stats), then it would follow that sub-prime resets are something to look at. David Berson of Fannie Mae [3], in his weekly column, took a close look at the numbers. [Note: Berson’s link lasts one week. On or after 5/25/07, go here [4] and search for his 5/18/07 post.]

The 2006 loan status is a good summary because all those products have reset. 76% were paid off and 12% continue to be paid at the higher rate (88% in good shape). 10% are under some sort of stress. The 2007 are really too soon to rely on because this data is only through the 1st quarter. However the stressed loans (excluding payoffs and current) are nearly double the rate of last year at 18%.

This is probably something to worry about because mortgage rates are currently rising [5] which will add to the stress level.