As Effects of Housing Slowdown Begin to be Felt, Investors Should Consider Equity-Rich MBS
July 7, 2006
With the housing slowdown and most of the mortgage-backed securities market trading at a discount to par, investors should consider placing their money in MBS backed by “traditionally qualified, equity-rich” borrowers, according to Bear Stearns latest analysis of short-term prepayment rates. In the last few years, nontraditional mortgages with high LTVs and low FICO scores, interest-only loans, and piggyback loans have prepaid faster than traditional low-LTV, amortizing loans, Bear Stearns analysts in “The New…