S&P: '06 Alt-A Loan Performance Deteriorating

There are "strong" and "growing" indications of deteriorating performance in alternative-A loans issued in 2006, according to Standard & Poor's.The percentage of such loans that are 90 or more days delinquent is 2.5 times higher than the previous year's figure and more than 4.0 times that of 2004 deals with the same amount of seasoning, S&P reported, citing data obtained from LoanPerformance. For example, after 14 months of seasoning, 90-plus-day delinquencies (including loans in foreclosure, real estate owned, and loans in bankruptcy) stand at 4.21% for the 2006 alt-A vintage, excluding payment-option adjustable-rate mortgage loans, S&P said. Comparable figures for 2005 and 2004 vintages are 1.59% and 0.91%, respectively. "The most disconcerting trend is how quickly the performance of these delinquent borrowers has deteriorated," S&P said. "We continue to see migration from 60-plus-day to 90-plus-day delinquencies within the 2006 vintage, suggesting that homeowners who experience early delinquencies are finding it increasingly difficult to refinance or work out problems, as opposed to being able to 'cure' falling behind on payments." S&P can be found online at http://www.standardandpoors.com.