“Dramatic Rise” in Alt-A Loan Delinquencies May Continue
CreditSights reports a “dramatic rise” in the number of delinquent Alt-A borrowers over the past three months, and anticipates a further increase in delinquencies in these “not-quite prime” mortgages by the end of this year.
According to CreditSights’ Alt-A Residential Mortgage-Backed Securities sample:
- The 2007-RMBS experienced their largest three-month rises in delinquencies yet. Delinquencies grew by 167 bp to 6.8% of the remaining balance.
- The growth in foreclosures slowed slightly in the three months to October.
- The number of loans that are in or near default rose roughly 200 bp in both the 2006 and 2007 Alt-A RMBS to respectively 16.4% and 12.6% of the remaining balances.
Now that delinquencies have started to rise once more – and given that foreclosures and REOs have, like delinquencies, tended to accelerate into year end – we expect to see the growth in foreclosures and REOs to pick up once again.
CreditSights’ detailed analysis is available here.
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