Refis May Hurt CMOs

U.S. banks that stocked up on collateralized mortgage obligations may record significant losses as a result of a wave of residential mortgage refinancing activity spurred by sharply lower interest rates.

  • 12 Jun 2012

U.S. banks that stocked up on collateralized mortgage obligations may record significant losses as a result of a wave of residential mortgage refinancing activity spurred by sharply lower interest rates. The trend could force banks to repay CMOs much sooner than they expected and hurt their future earnings.

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3 Lloyds Bank 7,329 24 9.17
4 Citi 6,748 19 8.44
5 JP Morgan 5,220 8 6.53

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