Loss of Equity in Homes Worries Fitch

Negative equity and unemployment pressures have caused Fitch Ratings to take various ratings actions on 767 alternative-A credit residential mortgage-backed securities deals. "Home price declines have resulted in negative home equity for approximately half of the remaining performing borrowers in the 2005-2007 vintages and approximately 10% of the remaining performing borrowers for all transactions prior to 2005," said Fitch managing director Vincent Barberio. "Unemployment is up significantly since our last alt-A rating review," he added. Although net roll-rates of performing borrowers into a delinquency status "have improved from the seasonal high in December, the net roll-rates for both the pre-2005 and 2005-2007 vintage groups in the first half of 2009 were approximately double that experienced during the same period in 2008 when modified loans are excluded," Fitch said. The number of alt-A loan mods completed "has risen but remains relatively limited to date," Fitch said.