Because of the lower value investors are placing on subprime loans, New York-based real estate investment trust MortgageIT Inc. is in the process of scaling back earlier plans for a "heavy growth strategy" within the subprime lending market.

Glenn Mouridy, MortgageIT's president and chief financial officer, said during the company's 3Q05 earnings conference call last week that while even gain-on-sale margins of pay option ARM products have begun rebounding, subprime margins continue to fall. Gain-on-sale margins for MortgageIT's subprime loans fell to 175 basis points in the third quarter from 227 in the second, he said, while overall gain-on-sale margins for the self-described conforming mortgage lender were 93, down from 114 in the second quarter.

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