Fitch: US RMBS risk diverging on recent investor loans

Deniz Kılınç / İstanbul, May 16 (DHA) – Fitch Ratings has stated that a recent rise in non-traditional or no income borrower documentation has led to significant variation in the credit risk of recently originated investor property loans in US residential mortgage-backed securities (RMBS) deals.
According to Fitch, loans that do not meet traditional residential or commercial underwriting standards “have significantly higher credit risk than those that meet agency conforming documentation standards”.
The Fitch statement concerning the recent investor loans is continued as follows: “There is extensive historical data available on agency conforming investor property loans. Fannie Mae and Freddie Mac provide loan level historical data on roughly three million investor loans with traditional documentation, allowing for a deep analysis of default and loss behavior through various economic environments.”