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Daily Real Estate News  |   February 5, 2007  |   Subprime Loan Defaults Hit Decade High
Home owners with subprime loans are missing payments more often than at any time in the last 10 years, according to a report by investment bank Friedman Billings Ramsey & Co.

The default rate on subprime loans that have been packaged into bonds to be sold to investors rose to 10.09 percent in November, up from 6.62 percent a year earlier. It's the highest default rate in a decade, exceeding the 10.05 percent level reached in November 2001 at the end of the last U.S. economic recession, the report says.

Defaults are rising as rates on many adjustable-rate mortgages reset and personal savings decline. The savings rate last year fell to a negative 1 percent, the lowest since 1933, during the Great Depression, Commerce Department data show.

"There are no signs of pressure abating (in) the subprime arena, and there are some signs that problems are accelerating," Angelo Mozilo, chief executive of Countrywide Financial Corp., the largest mortgage lender, said during a Jan. 30 conference call.

Source: Reuters News (02/02/07)

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