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SECONDARY MARKET ANALYTICS SERVICING ORIGINATION THE LATEST ORIGINATION Poll Shows Support for Tax Revisions A survey from the National Low Income Housing Coalition demonstrates support for alterations to the current structure for mortgage interest tax deductions. T Refinance Activity Brings 7-Year High for Prepayments According to recent data, prepayment rates climbed to highs not seen since 2005 in correlation with the ongoing refinancing boom. M Processing Services (LPS) revealed. LPS' August Mortgage Monitor ortgage delinquency rates fell in August as prepayment rates shot up, Lender report showed a national delin- quency rate of 6.9 percent, con- sistent with the company's earlier first-look data. Delinquencies were down 2.3 percent from July and 10.6 percent from their January 2010 peak. The amount of seriously accompanied by a significant boost in prepayment rates, hitting an an- nualized rate of nearly 25 percent— a level not seen since 2005. LPS' analysts said the broad- The drop in delinquency was based increase is another sign of heightened refinance activity. "Our analysis showed an delinquent loans has also shown great improvement, falling off by nearly half of its peak in January 2010. Most of that amount is now past due for more than nine months, with 43 percent of seri- ously delinquent loans more than one year past due. 38 | THE M REPORT increase in prepayment activity across the entire combined loan- to-value (CLTV) continuum," said Herb Blecher, SVP of LPS Applied Analytics. "While those loans with equity, particularly 80 percent CLTV and below, have much higher prepayment speeds, the impact of the Home Affordable Refinance Program (HARP) was also clear." Loans with higher CLTVs saw the greatest uptick in prepayment. Loans with a CLTV of more than 120 experienced a 65 percent year-to-date increase, while those with a CLTV be- tween 100 and 120 percent saw a 50 percent rise. The rise in prepayment rates was lower for older loans. For example, loans with vintages from 2007 or earlier only saw a prepayment increase of 9 per- cent, interpreted by LPS as "refi burnout." "Fewer than 30 percent of he mortgage interest tax deduction has been the subject of debate for some time. While the majority of Americans continue to support a mortgage interest deduction of some kind, a poll shows many believe the current deduction should be revised to help middle- and low-income homeowners. About 56 percent of respondents to a recent survey by the National Low Income Housing Coalition said they support replacing the current mortgage interest tax deduction with an alternative that offers the same percentage deduction to all homeowners without taking income into account. The survey of a little more than 1,000 Americans also found that 63 percent believe tax deductions should only apply to those whose mortgages are $500,000 or less. This idea was set forth by the National Low Income Housing Coalition. The same percentage said the federal government should use savings it would incur from revising the mortgage interest tax deduction to end homelessness. In the same survey, 69 percent of respondents said the federal government should offer programs to support affordable rental housing. Fewer respondents, but still a majority at 59 percent, said the federal government should help low- income families pay their rent. The poll was conducted by these vintages remain both active and current, and on average, they are marked by larger nega- tive equity positions and lower credit scores," Blecher said. "That said, HARP might yet represent a viable refi option for a good portion of this pool." Belden Russonello Strategies on behalf of the National Low Income Housing Coalition, a major supporter of revising the mortgage interest tax deduction. "It is time to enact reforms that will stop the subsidy of million- dollar houses and use the savings to help middle- and low-income families who need it most," said Sheila Crowley, president and CEO of the National Low Income Housing Coalition with the release of the survey results.