Residential mortgage-backed securities performance is expected to continue to deteriorate into 2010 while commercial MBS woes could persist into 2010 or 2011, according to Moody's Investors Service. "Commercial real estate is usually one of the last sectors both to enter a recession and exit one," Moody's said. Claire Robinson, a Moody's senior managing director, said changes in disclosure and regulation affecting the securitized markets is among other reasons MBS recovery may take this long. Higher investor risk premiums also play a role. The combination of these are likely to mean higher costs of securitization for issuers that also affect the market's rate of recovery, she said.
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