Latest Issue of First American LoanPerformance MarketPulse™ Features Study of 2005 Subprime Origination Default from Friedman, Billings, Ramsey
Report Also Includes Mortgage Delinquency and Prepayment Trend Data
SAN FRANCISCO, Dec. 6, 2006 – First American LoanPerformance, a subsidiary of First American Real Estate Solutions (RES®) and a leader in residential mortgage data and analytics for the mortgage industry and Wall Street, today announced that the latest issue of its MarketPulse report is available for download at www.loanperformance.com
This report features a new whitepaper by Michael D. Youngblood, Ph.D., managing director, asset-backed securities research for Friedman, Billings, Ramsey Group Inc. (NYSE: FBR) entitled, “Explaining the Higher Default Rates of the 2005 Origination Year.” The study examines the potential reasons why subprime loans originated in 2005 are experiencing higher default rates than loans of the same age originating in the two previous years.
“Market participants are concerned about the credit performance of adjustable-rate subprime residential mortgage-backed securities (RMBS) originated in 2005,” reports Youngblood. “We cannot accept the popular explanation that the higher default rate reflects the influence of rising short-term interest rates, to which adjustable-rate subprime loans generally are indexed. Nor can we explain the relatively higher default rates of adjustable-rate subprime loans originated in 2005 by reference to the erosion of underwriting criteria.”
The study attributes the increase in default rates to economic weaknesses in 95 metropolitan statistical areas, including weak labor market conditions and the ongoing impact of Hurricanes Katrina and Rita on Louisiana and Mississippi.
The report also summarizes a selection of key mortgage performance statistics through June 2006, including geographic markets with the highest percentage of interest-only purchase loan originations and the highest incidence of serious delinquency and prepayment rates for prime and subprime loans.
MarketPulse is a free quarterly report that presents analysis and insight into delinquency and prepayment trends for the prime, subprime, home equity and mortgage-backed and asset-backed securities markets. Each issue also contains a “RiskView” section with valuable insights from thought leaders on the prime, subprime and securities mortgage marketplace. The summary data in each issue of MarketPulse is extracted from First American LoanPerformance’s industry-leading mortgage servicing and securities databases. MarketPulse can be accessed by completing the electronic subscription form at www.loanperformance.com/marketpulse
First American LoanPerformance is a subsidiary of First American Real Estate Solutions and a member of The First American Corporation (NYSE: FAF) family of companies. LoanPerformance’s databases track the delinquency and prepayment performance of 50 million active individual mortgage payments per month and provide loan-level information on more than $1.5 trillion in active non-agency mortgage and asset-backed securities. The company’s data and suite of predictive prepayment and risk modeling solutions enable mortgage originators, servicers, securities issuers and investors to make informed business decisions about credit risk, loss mitigation, customer retention, securitization and investment. For additional information, visit www.loanperformance.com and www.firstamres.com.
The First American Corporation (NYSE: FAF), a FORTUNE 500® company that traces its history to 1889, is America’s largest provider of business information. First American combines advanced analytics with its vast data resources to supply businesses and consumers with valuable information products to support the major economic events of people’s lives, such as getting a job, renting an apartment, buying a car or house, securing a mortgage and opening or buying a business. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within five primary business segments, including: Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, and Risk Mitigation and Business Solutions. With revenues of $8.1 billion in 2005, First American has approximately 2,100 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found at www.firstam.com.
Contact:
David Schulz
Corporate Communications
The First American Corporation
(714) 250-3298
dschulz@firstam.com
