A new report by Bank of America Merrill Lynch examines the credit burnout phenomenon and its potential to allow underwater, but not yet delinquent, borrowers to demonstrate their creditworthiness.

Analysts stated that this trend is present in all sectors, but to a lesser degree in prime mortgages. They reported that after 30 months of being underwater, there was a 7% decrease in the rate of first delinquency for prime borrowers, with drops of 25% and 33% in the rates for Alt-As and subprime borrowers respectively.

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