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| There has been a “striking” improvement in the credit performance of nonprime securitized loans over the past year in most major markets. But some metropolitan areas didn’t fare so well.
Researchers at Friedman, Billings Ramsey & Co. analyzed the performance of nonagency securitized nonprime loans in 331 metropolitan statistical areas and found that serious delinquency rates, which represents loans past due 90 days or more, remain near the lowest levels of the new century. The subprime serious delinquency rate dropped in 279 MSAs to an average of 5.37% as of the end of May 2005 from 6.67% in May 2004, according to the real estate investment trust’s report. Rates exceeding the average were found in only seven MSAs. led by Cleveland, Ohio’s 18.57%. For Alt-A loans, serious delinquencies fell in 262 areas, bringing the average to 0.89% from 1.76%, Friedman reported. Delinquency rates were significantly greater than the average in 11 MSAs, with the highest — 10.34% — belonging to Sharon, Penn. Friedman, which itself acquired subprime originator First NLC Financial Services LLC earlier this year, attributed improvements in the credit performance to improving conditions in local labor markets since May 2004. The researchers also identified 58 areas in 16 states located on the eastern half of the U.S. that are experiencing persistently high serious delinquency rates — an average of 12.73% and 2.70% for subprime and Alt-A loans in these areas, respectively. Friedman suggested that portfolio managers reduce holdings of securities with exposure of 10% or more to these MSAs to improve credit performance. |
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Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.E-mail: s3celeste@aol.com |
