Spying on the enemy

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 years. For more information, visit www.ufanet.com.