IanB

Subprime Mortgage Losses: Not as Bad as Advertised

A question: I would expect that the $282bn of the 2006 vintage that has been repaid was done with refi's, rather than cash paydowns. Since 2007 loans won't be getting refi'd any time soon, won't the loss profile of 2007 loans look more like that of the $318bn balance of the 2006 vintage? In other words, why should we expect the 2007 loans made to refi those 2006 balances to perform any better than the average 2006 loan?