It’s been more than three years since overall monthly delinquency has improved on securitized loans, according to a new report. Signs of improvement in the nonprime sector might only be a mirage as Alt-A and subprime securities continue to be pounded by downgrades.
Home-loan delinquency of at least 60 days on mortgages backing RMBS rose for the 37th consecutive month in June, Fitch Ratings reported today.
The ratings agency noted that roll rates for prime RMBS stayed above 1 percent last month after falling below 1 percent in April. Roll rates were below the record 1.4 percent reached in March.
“Prime RMBS has yet to show any signs of a favorable turnaround,” Fitch Managing Director Vincent Barberio said in the report.
Prime jumbo delinquency finished last month at 10.4 percent, climbing from 10.3 percent the month before. In June 2009, the rate was 6.4 percent.
But subprime delinquency improved to 43.7 percent from May’s 44.8 percent, though it remains above June 2009’s 41.2 percent. Last month’s subprime roll rate was 4.2 percent, lower than 4.3 percent a month earlier.
Late payments on Alt-A issuances decreased to 33.7 percent from the previous month’s 33.9 percent. The Alt-A rate was 29.1% in June 2009. Alt-A roll rates increased to 3.4 percent from 3.1 percent. Except for April, Alt-A roll rates haven’t fallen below 3 percent since June 2008.
“The persistently high roll rates indicate that the delinquency declines are more a reflection of increased distressed property liquidations and ongoing loan modification activity than of widespread improvement in mortgage payment performance,” Barberio explained.
More than $40 billion in Alt-A securities have been recently downgraded by Moody’s Investors Service because of “rapidly deteriorating performance” and macroeconomic conditions that remain “under duress.” Citing the same issues, the New York-based ratings agency recently issued downgrades on more than $100 billion in subprime RMBS of the same vintages.
