Non-conforming RMBS arrears stabilising, says Fitch
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Fitch says the latest data for Q3 shows that loans three months or more in arrears comprise 19% of the current loan balance, the same as in Q2, following seven quarters of consecutive increases.
Peter Dossett, associate director in Fitch’s RMBS surveillance team, says: “Stabilising arrears levels are a positive sign for non-conforming RMBS transactions. However, they remain at historically high levels and therefore continue to represent a significant risk.”
Fitch says the reducing level of loans in arrears is also matched by falling levels of loans currently in repossession, caused by fewer new repossessions and continued strong activity by servicers to dispose of repossessed properties.
The disposal of properties continues to generate high levels of loss for transactions, particularly those from recent vintages, and this continues to be the main driver of negative rating action, with 55 tranches downgraded during the last quarter.
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