2012-12-05 —

As defaults and refinancing outside of the market erases debt, the amount of outstanding non-agency bonds will probably shrink to about $860 billion by the end of next year, from about $1 trillion now, according to Deutsche Bank.

The collateral for existing debt ranges from riskier so- called subprime and Alt-A loans to bigger jumbo mortgages, those larger than allowed in government-supported programs. That's currently as much as $729,750 for single-family properties in some areas, with limits ranging from $417,000 to $625,500 for Fannie Mae and Freddie Mac loans with the lowest costs for borrowers using 20 percent down payments.

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