Default rates on subprime mortgages will reach 22.17% by October, a 12-month increase of 14%, according to a new forecast made by Friedman Billings Ramsey. FBR sees alternative-A defaults rising to 6.67% in October, compared with 5.36% a year earlier. FBR says the higher default rate projections were spurred by a deteriorating labor market. On Friday, FBR threw its subprime unit, First NLC Financial Services, into bankruptcy. (See item above.) The lender is expected to be liquidated.

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