Fitch: Gulf RMBS Losses Not Substantial

Losses on residential mortgage-backed securities loans secured by properties affected by Hurricane Katrina are not likely to be substantial for RMBS rated by Fitch Ratings, according to the rating agency.Fitch said it has reviewed all its rated RMBS transactions for which loan-level data were available -- totaling $475 billion -- and found that only about 0.65% of the outstanding balances are secured by properties in areas declared to be "individual assistance" disaster areas by the Federal Emergency Management Agency. "Given that the areas affected by the flooding and hurricane damage represent a smaller area than the FEMA-designated disaster areas, Fitch believes that losses on the 0.65% exposure will not be substantial," the rating agency said. Fitch also reported that 72% of the approximately $3 billion of loans in such areas consist of subprime product, 15% prime, 9% alternative-A, and 4% "scratch-and-dent" and manufactured housing loans. About 72% of the $3 billion of loans are located in Louisiana, 15% in Alabama, and 12% in Mississippi.