Although housing market stability and new issuance that has risen to its highest point since 2007 have been helping private-label residential mortgage-backed securities to some degree, Standard & Poor’s said it considers the outlook “stable” rather than positive due to some challenges in the sector.
“While very high-quality jumbo mortgages with a near perfect performance have backed most conventional newly issued RMBS within the last several years
Other concerns identified by the company include “limited principal and interest advancing by servicers, foreclosure and liquidation timelines, and the impact of loan modifications.
“Our research has shown a continuous decline in servicer advancing (the percentage of delinquent loans for which the servicer passes through monthly principal and interest payments to the trust) over the last five years, with a softening in the decline over the most recent year,” S&P researchers said in a report.
