Jan 23 (The following statement was released by the rating agency)
Loss severities on liquidated U.S. RMBS loans rose last quarter following six straight
quarters of declines, according to Fitch Ratings in its latest quarterly index.
Home price increases in 2012 and early 2013 have been positively influencing
loss severities by offsetting the costs of extended liquidation timelines.
However, home price growth began to slow in fourth-quarter 2013 (4Qa€™13) while
timelines continued to lengthen, according to Director Sean Nelson. a€˜Judicial
foreclosure states were a particular problem spot with respect to longer
timelines last quarter, even as timelines in non-judicial states start to level
off,a€™ said Nelson. a€˜Longer liquidation timelines result in higher loss
severities due to greater carry costs and higher potential for property
Another notable incidence that took place last quarter involved servicer
advancing. Specifically, the rate at which servicers advanced missed borrower
payments increased in 4Qa€™13 for the first time since the onset of the financial
crisis. a€˜All things being equal, greater advancing typically results in higher
loss severities, though the recent increase in advance rates suggests that
servicers are starting to see greater recoveries as a result of the home price
gains,a€™ said Nelson.
Fitch's index is published quarterly and highlights performance trends in legacy
and new issue RMBS, house price conditions and mortgage market developments.
Fitch's Liquidation Timeline index measures the average number of months between
last payment and liquidation among liquidated U.S. private label, securitized
The Mortgage Market Index -U.S.A. is part of Fitch's of quarterly structured
finance index reports. It is available at 'www.fitchratings.com' or by clicking
on the below link.
Link to Fitch Ratings' Report: Residential Mortgage Market Index a€” U.S.A.