Some good news from Fitch this morning on mortgage delinquencies: May Residential Mortgage Backed Securities (RMBS) delinquencies declined for the second straight month, following a steady four year increase.
(RMBS are bonds backed by residential mortgages.)
Still, it is pretty staggering to look at the size of the delinquencies, which are defined as 30 days or more past due.
For subprime: 44.8 percent, down from 45.2 percent in April. But think about it: roughly 44.8 percent of subprime loans are in delinquency.
For Alt-A — borrowers with less than full documentation and lower credit scores (so called "Liar Loans") — the numbers were almost as high: 33.9 percent, from 34.1 percent in April.
Still, at least it's improving.
Here's the bad news: Fitch cautions that "approximately 9 percent of performing Alt-A loans and 37 percent of performing subprime loans are modified and have a substantial risk of re-default."
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