Mind Over Market

By Robert Stowe England June 14, 2010 Subprime loan performance of mortgages held in private label residential mortgage-backed securities (RMBS) has finally improved for the first time after rising steadily for nearly four years. Delinquencies in RMBS vintages from 2005 to 2008, which peaked at 54.4 percent in January 2010, began to decline over the last three months and fell to 51.5 percent as of April 2010, according to Moody's Investors Service. "Subprime mortgage loan performance appears to have turned a corner over the past several months," writes Peter McNally, vice president and senior analyst at Moody's in the credit rating agency's Weekly Credit Outlook for June 14. McNally notes that other classes of RMBS, jumbo prime and Alt-A and home equity, have also shown improvement, "though somewhat less pronounced." McNally is crediting the Home Affordable Modification Program (HAMP) as "one contributor" to the improved loan performance for s...

The performance of securitized assets will continue to deteriorate for commercial mortgage-backed securities (CMBS) into 2011 and possibly 2012, according to a new report by Moody's Investors Service. For residential mortgage-backed assets (RMBS), performance will decline into late 2010 or early 2011. The prospects for a recovery in securitization markets remain cloudy and depend on the bottoming of the housing market and the beginning of a decline in unemployment, the report concludes. When the markets return, a higher investor risk premium will mean a higher cost for securitizations. Demand by investors will be down significantly with the anticipated absence of the once-formidable special finance vehicle buyers of Collateralized Debt Obligations (CDOs). By Robert Stowe England MindOverMarket.blogspot.com September 15, 2009 “While there appears to be a glimmer at the end of the tunnel, it is still too early to interpret improvement or slowed deterioration in a particular sector as...