Counting on ARM Refis? Pay Heed

Those counting on business from adjustable-rate mortgage loans refinancing in 2007 need to pay heed to the latest statistics cited by Mortgage Bankers Association chief economist Doug Duncan.The MBA is predicting $2.12 trillion in production in 2007, down from a projected $2.46 trillion for all of this year. Refinancings will fall from $1.07 trillion in 2006 to $807 billion next year. Mr. Duncan told attendees at the MBA annual convention in Chicago the best estimates indicate that between $1.1 trillion and $1.5 trillion of ARMs will reset in 2007. There are three possibilities for those loans: refinancing, going into default, or resetting. Mr. Duncan said he thinks just $600 billion to $700 billion will refinance (which is already accounted for in the MBA's projection, he added). As for defaults, Mr. Duncan said many of those ARMs have already reset at least once, and the biggest threat of default is on the first reset. The remaining $500 billion to $800 billion of ARMs will just reset, he said. The MBA can be found online at http://www.mortgagebankers.org.