The housing market overall has now stabilized and is set to marginally improve going forward, according to an Oct. 9, report by Amherst Securities. But how it improves will recovery will vary by price range, location and seasonal adjustments to distressed property sales. These same factors also define how MBS deals are impacted.
According to the report in judicial states -- those in which a court order is necessary to proceed with the foreclosure process -- it will take much longer to clear the distressed housing inventory than the non-judicial states. As of Sept. 2012, the average non-agency MBS deal has 58% non-judicial loans (42% judicial) by balance; 63% non-judicial loans (37% judicial) by loan count according to CoreLogic, 1010Data, and Amherst data.