“After contributing to the collapse of Lehman Brothers Holdings Inc., bonds tied to the riskiest home loans have returned 75 percent since 2010, topping speculative-grade corporate debt for three straight years.”, January 2015, Mortgage Industry Newsletter

“If I went through my email inbox over the last few years I’d probably notice a few themes in the subject line; one of those themes would no doubt be inquires to where and when subprime will make its triumphant return. Any market has the capability of happening given an equal aggregate demand and an equal aggregate supply; subprime mortgages are no different….but don’t tell that to the CFPB. Investor dollars behave much like water; it flows and pools, sometimes backs up, but inevitably keeping it at bay it almost futile. Bloomberg article Subprime Angst Fades as Crisis-Era Bonds Show 12 Percent Returns is an excellent read for those interested in subprime performance as of late. “The securities that were created in the years before the financial crisis in 2008, which marked the last time they were issued, have gained almost 12 percent this year, or six times more than junk-rated corporate debt, according to Barclays Plc. After contributing to the collapse of Lehman Brothers Holdings Inc., bonds tied to the riskiest home loans have returned 75 percent since 2010, topping speculative-grade corporate debt for three straight years.” Delinquencies, by comparison, are not as catastrophic as of late either. According to the article, while almost 30 percent of the subprime mortgages tied to bonds are at least 60 days delinquent, the percentage has fallen from as much as 41 percent in 2010. In the broader market for mortgage securities without government backing, which also includes loans known as Alt-A and jumbo debt, the default rate has fallen to 23 percent from 30 percent in 2010. The market has potential, and a falling supply is helping the cause. According to Federal Reserve data, the amount of non-agency bonds has fallen to less than $720 Billion, from more than $2.3 Trillion in 2007”, Excerpt from January 2015 Mortgage Industry Newsletter

Posted on January 13, 2015, in Postings. Bookmark the permalink. Leave a comment.

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