While prime delinquencies continue to climb, subprime residential mortgage backed securities (RMBS) are declining and may be reaching a plateau, according to Fitch Ratings. Managing director Vincent Barberio said the agency’s latest performance metrics show the increased liquidation rate of delinquent loans has slowed considerably since April. “Prime delinquency increases have averaged 12 basis points a month since April, which compare favorably to 44-bps monthly averages between April 2009 and March 2010,” Barberio said. “While increased liquidations of distressed properties are helping to stem the rise in delinquencies, it also means that realized losses are rising.” The monthly annualized net-loss rate for prime RMBS has more than doubled from 0.8% to 1.7% over the past year, according to Fitch. The ratings agency said 60+ day delinquencies for prime jumbo RMBS rose to 10.6% for July, up from 10.4% for June and 6.9% a year earlier. The delinquency rate for loans originated prior to 2005 was 4.9%, while the rate for loans originated between 2005 and 2008 more than doubled to 12.5%. Meanwhile, subprime RMBS delinquencies in July fell to 43% from 43.7% in June, but were higher than the 41.8% a year ago. Fitch said Alt-A RMBS delinquencies for the month dipped slightly to 33.6% from 33.7% in June, but rose from 29.7% last year. California and Florida hold more than half of all Alt-A RMBS loans out. California, New York, Florida, Virginia, and New Jersey represent about two-thirds of the total prime RMBS sector, with the Golden State leading the way with a 44% market share. Write to Jason Philyaw.
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