Berson: $60B in B&Cs Could Refi as Prime

About $60 billion in subprime adjustable-rate mortgages that will reset upward this year can refinance into prime or near-prime mortgages, according to David Berson, Fannie Mae's chief economist.Mr. Berson, the second-day keynote speaker at the SourceMedia Nonprime Lending Conference in Las Vegas, said there will be $2.6 trillion of mortgages originated in 2007, down from $2.7 trillion in 2006. However, the refinance share of mortgages will increase because of borrowers who are moving from the subprime into the prime market. Mr. Berson said there actually could be more than $60 billion of these loans because there are a number of issues involved in getting certain subprime borrowers to make the move into prime. These include: not having experience with prime lenders; not knowing they are eligible to refinance; and having prepayment penalties inhibiting their ability to refinance.