Subprime Defaults Exceed 26%, FBR Says

Over 9% of securitized subprime loans were 90 days or more past due in February, 11% were in foreclosure, and over 6% were real estate owned, according to a Friedman Billings Ramsey Investment Management report. Overall the default rate on subprime loans stood at 26.6% in February, up from 25.2% in the previous month. Only 60% of subprime borrowers are current on their loans. The default rate on private-label securitized alternative-A mortgages jumped to 9.3% in February, up 103 basis points from the previous month's level. Of these alt-A mortgages, 3% were 90 days or more past due and 4.35% were in foreclosure. "We continue to expect default rates ... to rise persistently in 2008," said FBRIM managing director Michael Youngblood. Mr. Youngblood said he expects the default rate on securitized subprime loans to hit 30.3% by year's end. (The default rate includes loans 90 days or more past due, in foreclosure, and REO.)