Alt-A RMBS Delinquencies Fall for First Time in 4 Years, Subprime Also Lower
Serious delinquencies for U.S. Alt-A RMBS declined for the first time in four years, according to the latest Performance Metrics results from Fitch Ratings. Subprime late-pays also fell for the second straight month, while prime RMBS delinquencies increased slightly.
Higher cure rates and an increased volume of loan modifications, along with improvements in both liquidation and roll rates all contributed to the turnaround in both subprime and Alt-A delinquencies.
Last month’s improvements may be a signal that RMBS performance is beginning to the turn the corner. The next few months will be a better indicator of whether we’re witnessing the beginnings of a legitimate turnaround or a short-term seasonal effect of tax-refunds. – Fitch Managing Director Vincent Barberio
Despite the change in performance, Fitch cautions that approximately 8% of current Alt-A loans and 35% of current subprime loans are modified and have a substantial risk of re-default.
Alt-A RMBS delinquencies decreased to 34.1% in April from 34.4% in March (up from 27.4% in April 2009), representing the first month-over-month decline since April 2006.
Subprime RMBS delinquencies fell again in April, down to 45.2% from 46.3% the prior month. They remain above the 40.1% rate of a year ago.
Prime jumbo RMBS 60+ days delinquencies rose to 10.2% for April up from 10.1% for March and 5.4% a year ago. After nearly tripling in 2009, delinquencies are up another 98 basis points (bps) since the beginning of the year.
For details, see Fitch Ratings’ RMBS Performance Metrics (Premium)
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