Fitch: Alt-A Mortgages Deteriorating More Rapidly than Expected

Housing Wire ^ | 12/15/08 | PAUL JACKSON

[TigerLikesRooster]

Fitch: Alt-A Mortgages Deteriorating More Rapidly than Expected

By PAUL JACKSON

December 15, 2008

Citing “a rapid deterioration of U.S. Alt-A RMBS performance,” Fitch Ratings again took the hatchet to its previous assumptions for Alt-A mortgages on Monday morning, revising its surveillance methodology and updating loss projections for all U.S. Alt-A RMBS.

Fitch said it now expects losses on all Alt-A collateral to far exceed the estimates of its ‘moderate stress’ scenario in its late ratings update earlier this year. “Market developments, ongoing home-price declines and loan performance trends in the Alt-A sector over the prior six months have effectively eliminated the possibility of this stress scenario,” said Fitch in a statement.

The rating agency said it now expects average cumulative losses om 2005, 2006 and 2007 vintage Alt-A transactions to hit 2.72, 6.78 and 9.58 percent, respectively, up dramatically from expectations at the agency earlier this year.

Fitch cited a “rapid increase in 60+ day delinquencies experienced over the past six months,” despite servicers’ collective efforts to hold off on actual foreclosure sales — likely implying that a halt to foreclosures is having little effect in resolving borrower delinquencies. Between May and October 2008, Fitch said that 60+ day delinquencies for the 2007 vintage increased from 8.80 percent to 14.65 percent; 2006 and 2005 vintages also experienced steep increases rising from 10.30 percent to 14.24 percent and 6.57 percent to 8.79 percent, respectively.

[KarlInOhio]

That ain’t the half of it. 2004 was a big year for 5 year ARMs and they adjust in 2009.

If they're lucky their loans use a low Treasury rate or a prime rate as the base for the loan rate. If they're not so lucky they have a much higher LIBOR based rate.

[BamaBlue]

Have you seen the rates lately...I can get a 30 year fixed at 4.625% and a 15 year fixed at 4.50%...unbelievable...no points on either one...

I’m seriously considering refinancing my current 15 year fixed at 5.325% for the 30 year rate...save over $1,200 per month. No problem paying my current mortgage but it looks like opportunity to me.

Like you I’ve got about 12 years left but I believe I would be paying back that 30 year note in seriously inflation reduced dollars.

Am I crazy?

[B4Ranch]

I like the idea but can’t imagine that it would be approved. There is too much suction at the intakes for a rear mounted jet engine to be operable on floats, IMO.

[JDoutrider]

What level is below investment grade? Wall paper?

FIIK!

Maybe ZZTop rolling paper?

It's going to be a Long, Hot, Summer for sure!