During a panel at ABS East, an event organized by the Information Management Network, a representative from Standard & Poor's pointed out that some risks can never be truly removed from residential mortgage-backed securities.

The panel, titled "Legacy RMBS: Risk Mitigation", sought to give attendees lessons learned from the downturn. There are many, to be sure, and one of which is that RMBS is by nature a structured finance product built around the management of risk. Therefore, some risks can never be removed.

Sharif Mahdavin, a senior director at Standard & Poor's, said looking back, rate-based mortgage modifications are less successful than modifications that also reduce principal. The latter being more harmful to the investor's bottom line, though still better than liquidation.

However, the rise in home prices is helping to keep mortgages current, as Americans grow happier with their property investments.

"A lot of the successes you will see is HPA and not the success of a principal mod," Mahdavin said. A surge of modifications, known in the bond market as a duration risk, should now be expected if home prices started collapsing again. And there's little bond issuers can do to hedge against this risk, Mahdavin warned.

"Everyone is sharing pain across the stack and the new RMBS are pretty much structured pretty much the same way," he said. "It's a cautionary tale for the investor."

The mortgage servicing sector is experiencing remarkable improvement, though more work needs to be done, another panelist said.

Ryan Lilly, senior vice president of business development for Wingspan Portfolio Advisors, said big mortgage servicers are continuing to improve operations, and new regulations expected to take effect next year will likely lead to further gains.

"Longer term we will see significant improvement from larger mortgage servicers," said Lilly.