...Notwithstanding the changes in loss mitigation under way, data submitted by Fitch's rated servicers indicate that RMBS servicers have been responding to this challenging environment by increasing the overall number of loss mitigation (loss mit) resolutions or workouts, including significantly increasing the number of loan modifications (mods). In December 2008 research, Fitch projected that over the following 12 months RMBS servicers were expected to modify up to 15% of 2005-2007 vintage RMBS mortgages, an increase from virtually none in 2007. As of April 2009, approximately 7% of RMBS and 18% of RMBS subprime loans in these vintages had been modified. When properly done, modifications can benefit both homeowners and RMBS investors. As it has always been, the key to a successful loan modification program is sustainability. This depends on the borrower wanting to keep the property, as well as having sufficient cash flow to make the modified payment. However, based on information from servicers...
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