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FDIC REPORT SHOWS SUBPRIME MORTGAGE LOAN PERFORMANCE
AFFECTED BY RECESSION

FOR IMMEDIATE RELEASE
PR-14-2002 (2/7/2002)
Media Contact:
Rosemary George (202) 898-6530

The incidence of significant repayment difficulties among subprime mortgage borrowers is increasing, according to the Federal Deposit Insurance Corporation. Delinquencies on FHA-insured mortgages, which often exhibit characteristics similar to those of subprime mortgages, have risen sharply over the last two years. In addition, analysis of subprime mortgage pools shows that loans originated in 2000 are exhibiting higher delinquency rates than loans made in other years at a comparable point in the life cycle (vintage analysis).

Entry by FDIC-insured institutions into subprime lending as a targeted line of business was largely a phenomenon of the 1990s. Many of these programs are now being recession-tested for the first time.

These findings were released today in FYI, an e-mail bulletin covering FDIC analysis of emerging issues in banking and the economy. FYI is available on the FDIC web site at www.fdic.gov, where those interested in receiving each issue electronically may subscribe. A copy of FYI is attached.

Attachment: February 7, 2002, FYI

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 9,747 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars - insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov or through the FDIC's Public Information Center (800- 276-6003 or (703) 562-2200).

Last Updated 02/07/2002 communications@fdic.gov