Interest Only Mortgage Loan News

News from Freddie Mac says that it plans to stop buying and securitizing interest-only mortgage loans. They gave no explanation for the decision, but their January summary of operational activity indicated that delinquency on interest-only mortgages is running around twice the rate of fully amortized mortgages. For example, on interest-only fixed rate mortgage loans originated in 2006, 90 day delinquencies were substantially higher than fully amortized loans from the same time period.

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