The residential and mortgage-backed securities market has seen "substantial improvements," according to a new Fitch Ratings report.
The credit ratings service reports that the RMBS sector has "improved dramatically since the financial crisis."
"New legislation has completely eliminated some problem loan types like no-documentation loans and has increased the liability of lenders that make irresponsible loans," Rui Pereira, managing director of Fitch Ratings, said in a press release accompanying the report.
Fitch says that higher access to quality data has increased transparency, as well as the standardization of third-party review on loan documents.
"These factors allow for more reliable credit analysis and earlier detection of negative credit trends," the ratings agency said, while alternatively highlighting the lack of standardization in new deal reps and warranties as a red flag.
"While there have been notable improvements for rep and warranty enforceability, a lack of standardization across transactions is keeping investors wary," Pereira said in the release.
Political and regulatory sensitivity around residential mortgage-backed securities also remains a concern for disruption of the industry.
