UFA Default Risk Index for winter 2007MortgagePress.comrisk index has doubled, above the historical average, non-prime lenders
The University Financial
Associates LLC (UFA) Default Risk Index for the winter quarter
of 2007 is 115 up from a revised 110 last quarter. Since the bottom
in 2002, the risk index has doubled and is now above the historical
average for the 1990s (100), but still below the previous peak of
160 that registered in 1990. The index measures the risk of default
on newly originated non-prime mortgages.
Under current economic conditions, non-prime lenders should
expect defaults on loans currently being originated to be about
double the rate for loans originated in 2002 and 15 percent above
the rate on mortgages originated in the 1990s. These changes
reflect the current and expected future weakness in the collateral
markets, as well as the life-of-loan impact of mortgage rates.
UFA's analysis is based on a constant-quality loan a loan with
the same borrower, loan and collateral characteristics. The index
reflects only the changes in current and expected future economic
conditions, which are much less favorable currently than in prior
For more information, visit www.ufanet.com.