Here at HW, we’ve been covering what appears to be a potential rebound in the secondary mortgage market. But at least one senior exec is pulling a “not so fast” response to that sort of thinking. Via MarketWatch, late last week:

The market for highly structured credit products exposed to residential mortgage securities hasn’t rebounded, American International Group Chief Financial Officer Steven Bensinger said on Friday during a conference call with analysts. “If you look at the commercial mortgage-backed securities market, that has certainly done somewhat better in the second quarter so far than in the previous few quarters,” he explained. “However, in the highly structured credit market with residential mortgage, subprime and Alt-A securities, we don’t see any precise evidence to date that those markets have rebounded.” The closely watched ABX index, which has become a kind of benchmark for subprime mortgage securities, has recovered recently. But that “is not a good measure of what’s happening in our portfolios,” Bensinger stressed.

Which leads us to underscore the fragmented nature of the MBS market; agency bonds are soaring right now, and as HW’s Linda Lowell has noted, a prepayment-based investment strategy seems likely to work well on that side of the market. Bensinger’s comments serve as a reminder that subprime and Alt-A paper is still very much into the “distressed” category, however.