FBR: B&C Defaults, Foreclosures at Record Highs

The default rate on subprime mortgage loans hit a record high of 14.65% in July, up from the record 13.44% in the previous month, as foreclosures also set a record, according to a Friedman Billings Ramsey report.The subprime foreclosure rate rose 40 basis points in July to 5.77%. During the last major upheaval in the subprime market, the default rate hit a high of 13.42% in August 1997 and foreclosures hit a high of 5.19% that same month. The default rate on alternative-A loans also moved up in July to 3.34% from 3.0% in June. "The default rates on alt-A and subprime loans deteriorated sharply in July from June, as they did in June from May, ending six months of gradual erosion," FBR managing director Michael Youngblood said. FBR can be found online at http://www.fbr.com.