Fitch finds in examining Fannie Mae and Freddie’s Mac newly released loan-level data sets that while 2005-2008 loans outperformed nonagency ones during those troubled years, it expects somewhat of a reversal of the trend when it comes to better-performing recent loans.
“New agency pools will likely experience modestly higher defaults than recently issued nonagency due to differences in credit attributes,” the company said in a report released Monday.
“The nonagency selected sample set distinguishes itself from the agency datasets with higher FICO, lower DTI, and a significant percentage of high net worth borrowers. There have been no defaults to date in the nonagency set, although the sample size is very limited,” Fitch noted.
But in general, Fitch found, “Recently originated loans in both agency and nonagency are high credit quality and are expected to experience lower lifetime defaults than loans originated in prior years.” Also, “The credit quality of agency loans originated since the start of 2009 is notably better than that in prior vintages.”
Fitch expects the data to be of interest as the agencies’ regulators have directed them to test nonagency
