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	<title>pligg - published -mortgages-</title>
	<link>http://www.housebubble.org</link>
	<description>Pligg Web 2.0 Content Management System</description>
	<pubDate>Thu, 08 Mar 2007 11:27:59 MST</pubDate>
	<language>en</language>
	<item>
		<title><![CDATA[The Mortgage "Mess" is Spreading]]></title>
		<link>http://www.housebubble.org/story.php?title=Mortgage-Mess-is-Spreading</link>
		<comments>http://www.housebubble.org/story.php?title=Mortgage-Mess-is-Spreading</comments>
		<pubDate>Thu, 08 Mar 2007 11:27:59 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=Mortgage-Mess-is-Spreading</guid>
		<description><![CDATA[BusinessWeek has this report on defaults on mortgage loans having a broad impact on the financial services industry: &amp;quot;The canaries in the coal mine are keeling over fast. After years of easy profits, the $1.3 trillion subprime mortgage industry has taken a violent turn: At least 25 subprime lenders, which issue mortgages to borrowers with poor credit histories, have exited the business, declared bankruptcy, announced significant losses, or put themselves up for sale. And that's just in the past few months.Now there's evidence that the pain is spreading to a broad swath of hedge funds, commercial banks, and investment banks that buy, sell, repackage, and invest in risky subprime loans. According to Jim Grant of Grant's Interest Rate Observer, the market is starting to wake up to the magnitude of the problem, entering what he calls the &amp;quot;recognition stage.&amp;quot; Says Terry Wakefield, head of the Wakefield Co., a mortgage industry consulting firm: &amp;quot;This is going to be a meltdown of unparalleled proportions. Billions will be lost.&amp;quot;Hedge funds, those freewheeling, lightly regulated investment pools, seem particularly vulnerable. BusinessWeek has learned that $700 million Carrington Capital and $3 billion Greenlight Capital may have gotten badly burned because of their intricate dealings with New Century Financial, a major subprime lender whose stock has plunged 84% in four weeks amid a Justice Dept. investigations into its accounting. Magnetar Capital, a $4 billion fund formed two years ago, may be on shaky ground, too. The question is, how many others may be suffering? &amp;quot;This is a very opaque industry, so no one really knows,&amp;quot; says Mark M. Zandi, chief economist and co-founder of Moody's Economy.com (MCO) &amp;quot;My guess is that if you look at the top hedge funds, they're bearing most of the risk.&amp;quot; ...The biggest fear is that the trouble will move up the food chain. The same questionable lending practices that were used for subprime mortgages during the boom were also used for regular, or &amp;quot;prime,&amp;quot; mortgages-among them low or zero downpayments, loose loan-to-value ratios, and exotic mortgages with low up-front payments that balloon later.While subprime loans accounted for 20% of mortgages originated last year, David Liu of UBS estimates that fully 40% of last year's loans are &amp;quot;showing a lot of signs of stress.&amp;quot; Says Nouriel Roubini, economics professor at New York University's Stern School of Business: &amp;quot;The risk that prime borrowers will start to feel financial stress in 2007 cannot be underestimated.&amp;quot; &amp;quot;Full article at: http://www.businessweek.com/investor/content/mar2007/pi20070307_505304_page_2.htm &nbsp;&#187;&nbsp;<a href='http://www.businessweek.com/investor/content/mar2007/pi20070307_505304.htm'>original news</a>]]></description>
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		<title><![CDATA[New Century Mortgage REIT drops a whopping 60% in one day!]]></title>
		<link>http://www.housebubble.org/story.php?title=New-Century-Mortgage-REIT-drops-whopping-60-in-one-day</link>
		<comments>http://www.housebubble.org/story.php?title=New-Century-Mortgage-REIT-drops-whopping-60-in-one-day</comments>
		<pubDate>Mon, 05 Mar 2007 10:43:08 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=New-Century-Mortgage-REIT-drops-whopping-60-in-one-day</guid>
		<description><![CDATA[Reuters reports on a mortgage banking stock that just dropped a whopping 60+%!  If this is any indication of things to come, the entire banking industry itself could be in grave danger: &amp;quot;ew Century Financial Inc. (NEW.N: Quote, Profile, Research) shares fell more than 60 percent in early Monday trading, leading a broad decline among subprime mortgage lenders as the crisis in the sector escalates.The decline came after the largest independent U.S. subprime lender late Friday said federal prosecutors and securities regulators are examining accounting errors and stock trading.&amp;quot;We think there is further downside risk, possibly to $0,&amp;quot; wrote Merrill Lynch &amp;amp; Co. analyst Kenneth Bruce. &amp;quot;Bankruptcy seems a likely course of action.&amp;quot;&amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.reuters.com/article/hotStocksNews/idUSN0525703220070305'>original news</a>]]></description>
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		<title><![CDATA[Mortgage Defaults Spread]]></title>
		<link>http://www.housebubble.org/story.php?title=Mortgage-Defaults-Spread</link>
		<comments>http://www.housebubble.org/story.php?title=Mortgage-Defaults-Spread</comments>
		<pubDate>Thu, 01 Mar 2007 01:03:33 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=Mortgage-Defaults-Spread</guid>
		<description><![CDATA[The Wall Street Journal has an interesting report on bad mortgages spreading up from the subprime market into the &amp;quot;prime&amp;quot; market: &amp;quot;The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward.At issue are mortgages made to people who fall in the gray area between &amp;quot;prime&amp;quot; (borrowers considered the best credit risks) and &amp;quot;subprime&amp;quot; (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans -- which are known in the industry as &amp;quot;Alt-A&amp;quot; mortgages -- were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly 16% of mortgage originations last year and subprime loans an additional 24%....Data from UBS AG show that the default rate for Alt-A mortgages has doubled in the past 14 months. &amp;quot;The credit deterioration has been almost parallel to what's been happening in the subprime market,&amp;quot; says UBS mortgage analyst David Liu. The UBS report contrasts with testimony Federal Reserve Board Chairman Ben Bernanke gave to Congress yesterday. &amp;quot;Our assessment is that there's not much indication that subprime issues have spread into the broader mortgage market,&amp;quot; Mr. Bernanke said.To be sure, defaults have remained very low in the prime market -- and despite the uptick in bad loans, the problems in the Alt-A sector aren't as severe as those that have roiled the subprime market. Some 2.4% of Alt-A loans are at least 60 days past due, according to UBS, which looked at mortgages that were packaged into securities and sold to investors. That is well below the 10.5% delinquency rate for subprime mortgages. (During the housing boom, delinquencies were low for all types of loans because borrowers who wound up in trouble could refinance or sell.)...Some borrowers who took out Alt-A loans in recent years are starting to feel the strain. Johnny and Shirley Johnson, retirees in Cleveland, took out an option ARM when they refinanced their $92,700 mortgage in July 2005. The loan carried a 3.5% introductory rate that began moving upward a few months later. The couple, who live on a fixed income, are currently making the minimum payment on their loan. But they are afraid they won't be able to keep up with their loan and other debts once their monthly mortgage payment adjusts upward later this year.&amp;quot;We don't want to lose our home,&amp;quot; says Ms. Johnson. The couple is working with Acorn Housing Corp., a nonprofit group that provides housing counseling, in an effort to refinance into a 30-year fixed-rate mortgage. Though the monthly payment would be higher, the new loan would protect them against future increases.Housing counselors and bankruptcy attorneys say they are seeing an increase in troubled borrowers who previously had good credit. &amp;quot;We have clients with 720-plus credit scores, and they are in awful products,&amp;quot; says Jennifer Harris, executive director of the Home Loan Counseling Center in Sacramento, Calif. Some of these borrowers took out option ARMs with low introductory rates and are likely to fall behind when their monthly payment resets at a higher level, she says.&amp;quot; &nbsp;&#187;&nbsp;<a href='http://online.wsj.com/article/SB117271866822722900.html?mod=home_whats_news_us'>original news</a>]]></description>
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		<title><![CDATA[HSBC "Humiliated" in mortgage backed securities.  Is Merril Next?]]></title>
		<link>http://www.housebubble.org/story.php?title=HSBC-Humiliated-in-mortgage-backed-securities-Is-Merril-Next</link>
		<comments>http://www.housebubble.org/story.php?title=HSBC-Humiliated-in-mortgage-backed-securities-Is-Merril-Next</comments>
		<pubDate>Mon, 12 Feb 2007 13:33:36 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=HSBC-Humiliated-in-mortgage-backed-securities-Is-Merril-Next</guid>
		<description><![CDATA[Bloomberg reports that &amp;quot;Merrill Lynch &amp;amp; Co. Chief Executive Officer Stanley O'Neal was willing to lose $230 million to catch Bear Stearns Cos. and the shakeout is just beginning.That's because Merrill is determined to capture a dominant share of trading in bonds backed by home loans, the fastest- growing debt market since 1995 and this year's most troubled. O'Neal's enthusiasm for mortgages to potentially delinquent borrowers coincides with the highest default rate in more than six years, a record contraction in demand for so-called subprime loans and descending bond prices.Merrill already has bankrolled two home lenders that subsequently failed and purchased a third, First Franklin Financial Corp., for $1.3 billion, just before HSBC Holdings Plc disclosed that its bad-loan provisions increased 20 percent because of the unraveling U.S. subprime market.``You've got to remember'' that New York-based Bear Stearns, the perennial leader in mortgage bonds with only a quarter of Merrill's 56,000 headcount, ``got into this business at the height of the boom, when you could not lose,'' Angelo Mozilo, Countrywide Financial Corp.'s CEO, said in a telephone interview from his office in Calabasas, California.``The real test will come for these new players in how they do in this new cycle,'' Mozilo said. ``A couple may do fine and a couple won't do fine. Just because it's Wall Street and they've got into the origination business doesn't mean they automatically win.''Fees TripledNew York-based Merrill, the third-largest securities firm by market value, isn't the only challenger to No. 1 Bear Stearns. Deutsche Bank AG, Morgan Stanley and Barclays Plc have bought or agreed to buy subprime lenders in the past six months, betting that a bigger presence in mortgages will produce more revenue from packaging the loans into bonds.Fees from securitizing debts including mortgages, auto loans, aircraft leases and credit-card receivables have almost tripled in the past five years to $5.6 billion, Bank of America Corp. analyst Michael Hecht estimates.Bear Stearns was the top seller of mortgage bonds in 2006, its third year in first place, followed by Royal Bank of Scotland Plc's RBS Greenwich Capital Markets and Lehman Brothers Holdings Inc., according to data compiled by Bloomberg. The rankings don't include subprime deals.Merrill is counting on securitization to dispose of risky mortgages and avoid the headaches now plaguing HSBC, the world's third-largest bank. The London-based company on Feb. 7 increased the amount set aside for bad loans in 2006 to almost $10.6 billion, 20 percent more than analysts estimated, and shook up management in the U.S.Subprime TimeThe same day, New Century Financial Corp., the Irvine, California-based rival to HSBC in subprime mortgages, said the market has deteriorated so much that it expects to report a quarterly loss for the first time since 2001.``The best time to get in is when things are horrible,'' said Anthony Sanders, former director of mortgage-bond research at Deutsche Bank, who now is a finance professor at Ohio State University in Columbus. ``If you can get in at a discount and clean up the underwriting, that could be a big moneymaker when the housing market comes back.''O'Neal, 55, agreed to buy First Franklin from Cleveland- based National City Corp. in September. Since then, home loans to borrowers with erratic credit records or burgeoning debt burdens have defaulted at a faster rate than during the U.S. recession in 2001, according to Arlington, Virginia-based Friedman Billings Ramsey Group Inc. ... Eroding StandardsAt the time, home prices across the U.S. were surging as the growth in adjustable-rate, interest-only and so-called jumbo mortgages, and some of the lowest borrowing costs in 40 years, fueled buying. Lenders provided $640 billion in subprime mortgages last year, an increase of almost fivefold from 2000, according to Inside B&amp;amp;C Lending, an industry publication.With more than 8,500 financial institutions competing for mortgages, many began extending them to borrowers who might not have qualified previously.``Too many firms got involved in making loans probably motivated in part by fees,'' Federal Reserve Bank of St. Louis President William Poole told reporters after a speech last week. ``They thought they could lay off the credit risk by securitizing and selling these off in the market.'' &amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.bloomberg.com/apps/news?pid=20601087&amp;sid=aqTiIkTKqgzo&amp;refer=home'>original news</a>]]></description>
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		<title><![CDATA[Stocks of Home Lenders Plunge as Mortgages Sour]]></title>
		<link>http://www.housebubble.org/story.php?title=Stocks-Home-Lenders-Plunge-as-Mortgages-Sour</link>
		<comments>http://www.housebubble.org/story.php?title=Stocks-Home-Lenders-Plunge-as-Mortgages-Sour</comments>
		<pubDate>Sat, 10 Feb 2007 12:24:15 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=Stocks-Home-Lenders-Plunge-as-Mortgages-Sour</guid>
		<description><![CDATA[Bloomberg reports that shares of mortgage lenders are tanking as loads of subprime mortgages enter default: &amp;quot;Shares of U.S. mortgage lenders plunged after New Century Financial Corp. and HSBC Holdings Plc said losses from bad home loans are piling up faster than they expected.The stock of Irvine, California-based New Century fell $10.92, or 36 percent, to $19.24 in New York Stock Exchange composite trading, the biggest decline since October 1998. Accredited Home Lenders Holding Co. lost 6 percent to $27.25, Novastar Financial Inc. tumbled 11 percent to $18.31 and American Home Mortgage Investment Corp. slid 8.1 percent to $33.06.Both New Century and HSBC blamed rising defaults on so- called subprime loans they made to borrowers who had little credit history or heavy debt loads. Defaults on subprime loans increased nationwide last year as competition and a slower housing market prompted lenders to lower their standards and give mortgages to borrowers who couldn't make their monthly payments.``It's kind of a watershed moment where the magnitude of the problems really is starting to come to the surface,'' said Brian Horey, general partner at Aurelian Partners LP in New York, which has sold short shares of New Century. ``If you could fog a mirror, you could get a loan.''New Century, the second-largest subprime lender, said late yesterday it probably lost money in the last quarter and will need to restate 2006 earnings, and the company won't make as many loans this year as it had previously forecast. ... Among subprime loans, delinquencies of more than 90 days plus foreclosures and seized properties are at their highest level in at least six years, according to a Friedman Billings Ramsey Group report.Goldman Sees Trouble``That is the one area across all businesses in all firms that is actually in a bit of trouble now,'' David Viniar, chief financial officer of New York-based Goldman Sachs Group Inc., said today about subprime lending. ``That market's going to get worse before it gets better.'' Viniar spoke at an investor conference in Naples, Florida.Cooling demand for the mortgages spurred lenders including Wachovia Corp. and KeyCorp to shut or sell home-loan units in the past year. National City Corp. sold its First Franklin mortgage unit to get some of the riskiest loans off its books.``There's a lot of camouflaging going on in credit quality,'' said analyst David Hendler at CreditSights Inc. in an interview late last month. ``We're getting the sense in this shop that this is more than normal deterioration, that it speaks to deeper difficulties.'' &amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.bloomberg.com/apps/news?pid=20601087&amp;sid=a2RKPr.UwE4A&amp;refer=home'>original news</a>]]></description>
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		<title><![CDATA[Mortgage Defaults Rise to Worst Level Since 2001]]></title>
		<link>http://www.housebubble.org/story.php?title=Mortgage-Defaults-Rise-to-Worst-Level-Since-2001</link>
		<comments>http://www.housebubble.org/story.php?title=Mortgage-Defaults-Rise-to-Worst-Level-Since-2001</comments>
		<pubDate>Fri, 02 Feb 2007 12:46:56 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=Mortgage-Defaults-Rise-to-Worst-Level-Since-2001</guid>
		<description><![CDATA[Bloomberg reports: &amp;quot;Defaults on mortgages to people with poor credit histories or large debt burdens rose in November above their worst levels during the last recession six years ago, according to Friedman Billings Ramsey Group Inc.The percentage of subprime mortgages packaged into bonds and delinquent by 90 days or more, in foreclosure or already turned into seized properties climbed to 10.09 percent from 9.08 percent in October, analysts led by Michael D. Youngblood at the Arlington, Virginia-based firm said in a report today. The default rate fell to 5.37 percent in May 2005 from 10.05 percent in November 2001, when economic growth resumed.Defaults on subprime loans have surged as rates on ones made in 2002, 2003 and 2004 adjust higher as their fixed-rate periods end following an increase in short-term interest rates from the lowest in 45 years. Subprime mortgages made in 2005 and 2006 are suffering from slumping home prices and looser lending standards.``These borrowers are very leveraged and have little skin in the game'' because they took out loans with small, or no, down payments and many of them haven't seen their properties appreciate, Debashish Chatterjee, an analyst at Moody's Investors Service in New York, said in an interview Jan. 26.Friedman Billings didn't say whether the default rate was the highest ever. Youngblood, who used data from San Francisco- based First American Corp.'s LoanPerformance unit, wasn't available for comment.U.S. economic growth rose to a 3.5 percent pace in the fourth quarter, the Commerce Department said Jan. 31. The economy shrank at a 1.4 percent annual rate in the third quarter of 2001, amid the terrorist attacks of Sept. 11 and stock-price declines, the biggest contraction since the first quarter of 1991. &amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.bloomberg.com/apps/news?pid=20601087'>original news</a>]]></description>
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		<title><![CDATA[Wall Street Afraid of Mortgage Defaults]]></title>
		<link>http://www.housebubble.org/story.php?title=Wall-Street-Afraid-Mortgage-Defaults-1</link>
		<comments>http://www.housebubble.org/story.php?title=Wall-Street-Afraid-Mortgage-Defaults-1</comments>
		<pubDate>Sun, 28 Jan 2007 12:13:00 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=Wall-Street-Afraid-Mortgage-Defaults-1</guid>
		<description><![CDATA[The Wall Street Journal (subscription required) reports &amp;quot;The bond market is signaling heightened fears about the ability of America's more financially stretched borrowers to keep up their mortgage payments.The weak U.S. housing market has cut the value of some homes to below the amount the owners owe on their mortgages, making them prone to default. The risk is showing up in the subprime-mortgage market, which serves borrowers with the worst credit histories. Default rates in this market are rising. Meanwhile, hopes that the Federal Reserve would cut interest rates soon, easing pressure on borrowers, have faded in recent days.Wall Street's worry about mortgage defaults is showing up in a set of indexes called ABX-HE, administered by Markit Group Ltd. These indexes track the cost of using financial contracts known as credit default swaps to buy insurance against defaults on securities backed by subprime mortgages....[the] decline signals that sellers of these insurance contracts are demanding larger payments to compensate for what they see as a higher risk of mortgage defaults, which would reduce the value of mortgage securities.The turmoil is notable because credit markets otherwise look stable. Treasury bond yields remain low and capital is abundant for corporate borrowers.Mark Adelson, head of structured-finance research at Nomura Securities International Inc. in New York, said the market is &amp;quot;worried about the potential of an approaching storm.&amp;quot; He said weak home-sales numbers reported Thursday were one immediate cause of the latest downward lurch in the ABX indexes....Hedge funds are believed to have been among the big buyers of this protection, a way of betting that defaults will increase.&amp;quot; &nbsp;&#187;&nbsp;<a href='http://online.wsj.com/article/SB116982724866589094.html?mod=hpp_us_at_glance_most_pop'>original news</a>]]></description>
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		<title><![CDATA[Wall Street Sours on Risky Mortgages]]></title>
		<link>http://www.housebubble.org/story.php?title=Wall-Street-Sours-on-Risky-Mortgages-1</link>
		<comments>http://www.housebubble.org/story.php?title=Wall-Street-Sours-on-Risky-Mortgages-1</comments>
		<pubDate>Fri, 26 Jan 2007 09:46:13 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>mortgages</category>
		<guid>http://www.housebubble.org/story.php?title=Wall-Street-Sours-on-Risky-Mortgages-1</guid>
		<description><![CDATA[The New York Times reports that &amp;quot;Wall Street's big bet on risky mortgages may be souring a lot faster than had been previously thought.The once booming market for home loans to people with weak credit - known as subprime mortgages and made largely to minorities, the poor and first-time buyers stretching to afford a home - is coming under greater pressure. The evidence can be seen in rising default rates, increasingly strained finances at mortgage lenders and growing doubts among investors....Across the industry, 2.6 percent of the subprime loans securitized in the second quarter of 2006 had been foreclosed on or repossessed within six months. That is up from 1 percent for loans securitized in the second quarter of 2005, according to Moody's Investors Service, the ratings agency.Joseph Rocco, an analyst with Moody's, noted that foreclosure rates typically rise as loans get older.The grim statistics reflect the sharp slowdown in housing. Home prices, for instance, in many previously hot markets on the coasts and in the Southwest, are falling as sales have slackened, making it harder for homeowners to sell their properties.They also indicate that mortgage lenders became more generous last year, giving 100 percent financing and allowing borrowers to state their incomes with little or no documentation in an effort to bolster volume, according to industry experts.&amp;quot;Now, Wall Street firms, which had helped fuel the growth in the market by bankrolling and investing in subprime mortgage lenders, have begun to pinch off the money spigot.Several mortgage lenders have recently collapsed. While the failures so far are small in number, some industry officials are concerned that they could be the first in a wave. The subprime sector, which produced loans worth more than $500 billion in the first nine months of last year, could shrink significantly.A sharp contraction in subprime mortgages would have ripple effects, reducing consumers' access to credit and affecting investors like foreign central banks, pensions and mutual funds that have been big buyers of mortgage-backed securities.The recent bankruptcy of Ownit Mortgage Solutions, a lender based in Agoura Hills, Calif., provides a cautionary tale. Even as its revenue grew by more than a third in the first nine months of 2006, to $8.3 billion, the company was losing money. It shut down after its financial backers, which included Merrill Lynch &amp;amp; Company and JPMorgan Chase, could not come up with a deal to save it.In addition to Ownit, Sebring Capital Partners, based outside Dallas, closed in December, and Mortgage Lenders Network of Middletown, Conn., has stopped making loans through brokers. It also laid off more than 800 employees and is under investigation by state regulators.&amp;quot;Pick a company - small, medium or large - they all have the same problem: capital,&amp;quot; said Marc A. Geredes, who runs a small mortgage company, LownHome Financial, in San Jose, Calif. &amp;quot;The economics of the business do not make sense right now.&amp;quot;Wall Street firms were attracted to such lenders because they helped feed a pipeline of securities backed by the mortgages, a market bigger than the one for United States Treasury bonds and notes. Merrill Lynch, for example, securitized $67.8 billion in residential mortgages in the first nine months of 2006, up 58.4 percent from the period a year earlier.But an increasing number of borrowers are defaulting on subprime loans earlier now than they did a year ago, often within six months of having taken the loan out, shaking Wall Street's confidence in its subprime partners.In one indication that investors are losing their taste for mortgages, hedge funds that specialize in mortgage-backed securities had an outflow of $1.8 billion in 2006, down from an inflow of $1.8 billion in 2005, according to Hedge Fund Research. It was the only category of hedge funds to have a negative flow for the year. &nbsp;&#187;&nbsp;<a href='http://www.nytimes.com/2007/01/26/business/26mortgage.html?_r=2'>original news</a>]]></description>
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