Bad news from the housing and subprime MBS industries suppressed securitization productivity last week - and not just for mortgage-related fixed-income products.

After Countrywide Financial told investors that continued weakness in the housing market caused its second-quarter profits to shrink by nearly a third, the National Association of Realtors reported that existing home sales slumped in June. Hitting closer to home, Moody's reported that mortgage credit quality would weaken substantially through the rest of 2007 and well into next year. By summer 2008, the service predicted, delinquencies would peak at 3.6% of all mortgage debt outstanding. Once again, the subprime ARM MBS market is expected to suffer the most severe losses, with the in-foreclosure rate expected to hit 10% by mid-2008.

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