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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: loantech who wrote (45997)	11/22/2005 3:06:21 PM
From: Ramsey Su	Read Replies (3) of 110194

NFI releases Monthly Production numbers. novastarmortgage.com Looking back to loans originated Jan 04 (which means they are about due for reset), you can see what the Weighted Avg Coupon rates are at the bottom of the report. novastarmortgage.com Now fast forward to the latest month, Oct 2005. novastarmortgage.com Look at the Coupon rates, it has barely gone up. If you look up the Libor, back in Jan 04, 6 months LIBOR was floating around 1.2%. Today, LIBOR is floating around 4.5%, a 330 basis point increase. I wonder if NFI can explain how their WAC is only going up 30 to 50 basis points while the index has gone up 3 folds? Could it be competition? Could it be their subprime borrowers are tapped out? Could it be that if they do not try to churn their existing borrowers at an artificially low rate, none of them would be able to handle a 40+% increase in payments when the reset takes place?

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