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Non-Performing Bucket Shrinking for Private Label MBS: Amherst

Reperforming and nonperforming loans decreased $6.1 billion to $528.6 billion in May compared to the previous month of April for private label mortgage backed securities (MBS), according to a report from ""Amherst Securities Group"":http://www.amherst.com/.


The decrease came after a reduction of $6.4 billion in the non‐performing bucket and a $0.3 billion growth in the re‐performing bucket, reflecting elevated liquidations and a slowdown of new defaults, Amherst stated in the report.

Liquidations totaled $8.7 billion in May, falling from last month's $8.9 billion.

Compared to previous one-year periods, liquidations are declining but remain elevated. According to the report, the increase in foreclosure activity late last year led to liquidations 8 months later.


For the last 12 months starting with May 2012, liquidations averaged $8.2 billion, lower than the $9.4 billion average monthly liquidations for the twelve months ending May 2011, and $13.7 billion for the twelve months ending May 2010.

The average number of months liquidated loans stayed in the pipeline was 27.4 months (17.1 months in delinquency, 7.8 months in foreclosure, and 2.5 months in REO).

Short sales took the shortest number of months to liquidate in May at a little more than 20 months, while REOs took longer than the 27.4 month average and had a timeline averaging above 30 months.

Month-over-month, non-performing loans decreased to $310.9 billion from $317.3 billion. Fewer loans are actually moving into the non-performing category through default than moving out of the non-performing bucket through liquidation or a modification.

Loan modifications totaled 15,672 in May, down from 21,082 in April.

Since February, principal modifications have become the most popular modification type, and accounted for 41.6 percent of all loan modifications last month, according to the report. Rate modifications made up 32.8 percent of all modifications, and capitalization mods 25.6 percent.

Compared to May 2011, principal modifications comprised 25.6 percent of all modifications, rate modifications were 48.4 percent, and capitalization mods were 26 percent.

About Author: Esther Cho


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