Last week the research group at UBS Warburg examined current home-equity pool collateral characteristics, finding subtle but meaningful differences between today's market and the 1998 heyday-blowout that left so many lenders in the gutter.

At issue is whether lenders today are more conservatively pricing their loans. Warburg finds that the weighted average coupon in today's fixed-rate pools is nearly identical to 1998 pools, though a pure WAC comparison fails to recognize the expanded use of prepayment penalties, the researchers note. A borrower that takes a prepayment penalty receives a rate discount of between 50 basis points and 100 basis points, said Tom Zimmerman, of Warburg's ABS research group.

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