Subprime was the topic du jour last week with several pieces of negative news causing more flights-to-quality into midweek. The headlines included the delisting by the New York Stock Exchange of New Century's stock and the initiation of a criminal probe into the firm; news that subprime lender Accredited Home Lenders Holding Co. needed to raise money after meeting margin calls and cutting jobs and, finally, ResCap's reporting a steep drop in operating earnings for 2006 versus 2005 due to its nonprime asset portfolio.

In the midst of all these, the Mortgage Banker Association's fourth-quarter delinquency survey reported that delinquency rates on subprime ARMs jumped 122 basis points to 14.44%. The MBA's report also showed that 4.95% of subprime mortgage loans outstanding were in foreclosure at the end of the fourth quarter, up from 3.86% at the end of the third quarter.

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