As not only Hurricane Katrina, but pockets of rapid home price appreciation have made "geographic concentration" a popular term lately among concerned secondary market participants, another factor - borrower type - has entered into the equation as areas where the non-traditional buyer prevails have, on average, become more pronounced. Subprime and Alt-A borrowers have become increasingly concentrated by geographic region in the last five years, and the top 10 MSAs with the highest concentration of non-agency borrowers has refreshed itself by half, according to RBS Greenwich Capital head of ABS and mortgage credit strategy Peter DiMartino.

Loans classified as subprime had the lowest concentration risk among three non-agency sectors - subprime, Alt-A and Resi-A - analyzed last week by RBS Greenwich. The top 10 subprime MSAs measured 32% of the sector, rising from 25% prior to 2000, whereas the Alt-A sector has increased to a 42% concentration, rising 15% since 2000. The Resi-A sector, at 52% has the largest concentration, has decreased from a 54% concentration.

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