Prepayments on subprime mortgage-backed securities slowed in September, and it could be a sign that house price declines are preventing borrowers from taking advantage of low interest rates and refinancing into fixed-rate mortgages, according to a report by Friedman, Billings, Ramsey & Co.Nearly 75% of subprime borrowers current in July had a "compelling financial incentive" to refinance, but prepayment rates declined and defaults rose. This situation "strongly suggests that subprime borrowers are progressively less able to refinance," FBR managing director Michael Youngblood says in the report. House prices fell 1.3% from the first quarter to the second quarter in 140 metropolitan statistical areas, representing 44.3% of the U.S. housing stock. "House prices may have fallen in these areas in the third quarter sufficiently to deter subprime borrowers, especially those with second or higher liens, from refinancing," the FBR report says. The FBR report also indicates that subprime MBS issuance declined to $13.1 billion in September from $48.7 billion in September 2006. FBR can be found online at http://www.fbr.com.
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A federal judge in Texas dismissed the Consumer Financial Protection Bureau's medical debt rule and prohibited states from passing their own laws prohibiting medical debt on credit reports.
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Dr. Mark Calabria takes on the additional role of chief statistician of the United States; retired Ally Bank executive Diane Morais has joined First Citizens Bancshares' board of directors; MainStreet Bank has promoted Alex Vari to chief financial officer; and more in this week's banking news roundup.
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While refinances are behind the latest increases, the pace of purchase activity may be a stronger indicator of where the housing market sits.
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The share of economists expecting a September rate reduction grew in the July Wolters Kluwer survey, but the October or later percentage also increased.
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Rising home prices and softening sales offer a mixed view of a market that some say is shifting to favor buyers.
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The notes are backed by home improvement installment loans originated by approved dealers in Foundation Finance Company's network.
10h ago