As an increasing number of subprime borrowers choose the 40-year mortgage - and an increasing number of issuers offer them - investors are wondering how they stack up against an interest-only loan.

According to UBS, anecdotal evidence indicates that the 40-year loan product constitutes as much as 30% to 35% of some subprime mortgage issuers' current loan volume. At least one issuer, Ownit Mortgage Solutions, has unveiled a 45-year mortgage product. More companies are expected to follow in its footsteps (ASR, 2/13/06).

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