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Banks' Projected MBS Losses Over $250B

According to new research by ""Standard & Poor's"":http://www.standardandpoors.com released this week, $250 billion of securitized mortgages are presently in bankruptcy, foreclosure, or REO, and the company says the performance of private-label securities - those that banks keep on their books - are expected to decline even further.
S&P analysts forecast new losses from legacy residential mortgage-backed securities (MBS) to total at least $260 billion. They said in a worst-case economic scenario, future losses could reach upwards of $375 billion.
S&P calculated that U.S. banks continue to hold $1.7 trillion dollars in private-label mortgage securities on their books. Within these mortgage pools, analysts said they expect to see a minimum of $165 billion in losses from subprime MBS, $80 billion from Alt-A, and $5 billion from securities backed by prime loans.
S&P said in the report, ""We believe these loans will keep continued downward pressure on housing prices.""
Despite the additional losses expected, Michael Thompson, managing director of S&P's market, credit, and risk strategies group and author of the report, offered an optimistic prognosis. He told the _""Wall Street Journal"":http://www.wsjonline.com_, ""There are going to be more defaults, but the worst of the big downward lurches are probably over and the systemic threat from the residential mortgage market is diminished.""

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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