Fitch Reports Mixed Results on RMBS Delinquencies in June

Delinquency rates for residential mortgage-backed securities (RMBS) were mixed in June, ""Fitch Ratings"":http://www.fitchratings.com/index_fitchratings.cfm [IMAGE]

recently reported. According to the New York-based rating agency's latest Performance Metrics results, U.S. prime RMBS serious delinquencies rose for the 37th consecutive month in June. But during the same period, Alt-A RMBS delinquencies declined for the third consecutive month, and subprime late-pays fell for the fourth straight month.

Prime jumbo RMBS 60-plus day delinquencies rose to 10.4 percent in June, inching up from 10.3 percent in May and significantly higher than 6.4 percent one year ago. Since the beginning of the year, late-pays have increased 1.2 percent. In addition, Fitch said June roll rates for prime RMBS remained above 1 percent after dipping below that level in April but remained below their highest-ever level of 1.4 percent recorded in March.

Meanwhile, Alt-A RMBS delinquencies decreased to 33.7 percent in June from 33.9 percent in May but were still up from 29.1 percent during the same month last year. Despite the month-to-month drop in late-pays, roll rates remained high, rising to 3.4 percent in June from 3.1 percent one month earlier. Prior to a sharp decline in April, roll rates had not been below 3 percent since June 2008, Fitch said.

Subprime RMBS delinquencies also fell again in June, dropping to 43.7 percent from 44.8 percent the month prior. However, late-pays remain above the 41.2 percent rate of a year ago. Fitch said the roll rate for June fell slightly to 4.2 percent from 4.3 percent in May and remained well below the trailing 12-month average of 5.3 percent.

According to Fitch, the improvements in subprime and Alt-A RMBS delinquencies were noteworthy, but the rating agency noted that the portion of borrowers who were current on their mortgage the previous month and became delinquent the next â€" known as monthly current-to-delinquent roll rates â€" remained elevated.

""The persistently high roll rates indicate that the delinquency declines are more a reflection of increased distressed property liquidations and ongoing loan modification activity than of widespread improvement in mortgage payment performance,"" said Vincent Barberio, managing director of Fitch. Furthermore, he said, ""Prime RMBS has yet to show any signs of a favorable turnaround.""