Thursday, August 7, 2008

Putting the BS Back in MBS

Below is an EconomPic'd version of a great table posted at Calculated Risk which summarizes the percentage of loans with high loan to value "LTV" and/or low FICO (credit) scores made over the last five years. Specifically shown are fixed 30 year loans and fixed interest only "I/O" 10/20 loans (the interest-only portion runs for 10 years and then fully amortizes over the remaining 20- year term).


So what does it show? It shows that recent loans have gotten a whole lot riskier for taxpayers Fannie and Freddie, especially if prices continue to slide.