One million securitized subprime mortgage loans were 90 days or more past due, in foreclosure, or real estate owned as of Oct. 31, according to the latest credit performance report by Friedman Billings Ramsey Investment Management. Subprime defaults have jumped from 9.1% in October 2006 to 19.4% in the space of 12 months -- raising the number of subprime foreclosures to 417,800. The foreclosure rate was 7.8% in October. FBRIM managing director Michael Youngblood said he expects the default rate to go higher as resets on adjustable-rate subprime mortgages kick in this year. So far, defaults have been driven by lax underwriting standards and, more recently, by declining house prices and weakening labor markets. FBRIM researchers used a database of 5.18 million subprime loans in compiling the October credit performance report on nonagency securitized mortgages.

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