The percent of home equity loans characterized as seriously delinquent continued declining in March, according to data released by Moody's Investors Service. Although, the rating agency pointed out the percent of overall delinquencies were watered down by a roughly 20% increase of new home equity issuance over the same month last year, essentially freshening up the pool with new loans. The percentage of loans more than 60 days delinquent stood at 5.19%, marking a 21% decrease from the same time last year, when the amount of loans delinquent stacked up at 6.59%, according to Moody's. The rating agency tracks the aggregate performance of home equity loans backing the securities it rates.

The downturn in the overall portion of loans delinquent was a result of the larger sample size than in previous years, Moody's reported. "While Moody's expects that this trend will eventually reverse itself, there are no signs of this occurring yet as the addition of $39.1 billion worth of new pools to Moody's Home Equity Index Composite kept both the delinquency and charge-off rates low," Moody's stated in a release last week.

The volume of new home equity pools securitized in March is 20.8% greater than last March; home equity issuance rose by nearly 34% in 1Q05, compared with the first quarter of last year, according to Moody's.

Meanwhile, the total number of past-due subprime loans crept up in 1Q05 to 10.62%, compared with 10.33% in 4Q04, but still lower than the 11.66% reported one year ago, according to the Washington D.C.-based trade group the Mortgage Bankers Association's National Delinquency Survey's first-quarter results. The MBA's data is based on the seasonally adjusted delinquency rates for mortgage loans on one-to-four unit properties; the MBA relies on data provided to it by its member organizations.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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