Freddie Mac reported that it plans to stop buying and securitizing interest-only mortgages.
While Freddie gave no explanation for the move, its January summary of operational activity indicated that delinquency on interest-only fixed-rate mortgages is running around twice the rate of fully amortizing loans.
For instance, on interest-only fixed-rate loans originated in 2006, the 90-day delinquency was nearly 900 basis points higher than on fully amortized fixed-rate loans from the same vintage.
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