Fitch: So Far So Good for Rated U.S. Re-Performing RMBS Performance

Fitch Ratings, New York, said early performance indicators for its rated re-performing loan residential mortgage-backed securities transactions is in line with expectations and slightly better than their non-rated counterparts.

The rated RPL market has grown with more new issuers participating since the end of 2014. Fitch rated all 12 RPL transactions that have come to market from four issuers through the end of March. The agency said each deal had extensive due diligence performed including checks for compliance, tax and title searches as well as recording of assignments among others.

Fitch reported as of the March remittance period, the aggregate percentage of loans 60 or more days delinquent across all Fitch-rated transactions was less than 3 percent. Losses realized to date have generally been negligible.

“Non-rated RPL transactions appear to be more adversely selected with a larger presence of borrowers with weaker credit profiles,” said Fitch Senior Director Suzanne Mistretta. “Non-rated RPLs are also showing lower average balances and higher delinquencies at issuance than the Fitch-rated deals.”

Mistretta noted most of the difference in performance between Fitch-rated and non-rated RPLs stems from underlying collateral risk attributes. She said Fitch also believes that the criteria for achieving investment grade ratings has contributed to the stronger performance on Fitch-rated RPLs.