The highest delinquency to date of any post-crisis residential mortgage-backed security (RMBS) doesn't indicate any trend of future delinquencies, according to an analysis by Fitch Ratings. The delinquency, according to the company, came about due to a transfer of servicing, and doesn't point to any widespread post-crisis late payment increases.
The company reported that Sequoia 2014-1 found that 3.37 percent of borrowers were behind on their payment. "All of the delinquent mortgage loans in Sequoia 2014-1 had been recently transferred to Cenlar FSB. Fitch Ratings has spoken with the issuer about the transfer," the company said.
"Early delinquency related to servicing transfers in recent RMBS is typically due to the borrower mailing the payment to the wrong address and generally doesn't result in longer term payment issues," said Managing Director Grant Bailey. Fitch noted that only one borrower became 60-day or more delinquent of the 121 borrowers in recent RMBS pools that were delinquent in the first three months.
Previously, one serious delinquency unrelated to a servicing transfer also occurred last month in an RMBS deal originated post-crisis. Fitch pointed out that the borrower in question had a 756 FICO score and a 57 percent loan-to-value ratio. "Of the 17 borrowers in recent RMBS pools that went over 60+ days delinquent, only one did not subsequently cure," Bailey said.
The company commented, "Prepayment rates also rose to double-digits for nine recent mortgage pools, reflecting mortgage rates that fell to their lowest levels since last year. Overall constant payment rates across all vintages remain near historical lows (6%)."