The level of arrears in U.K. nonconforming RMBS transactions has stabilized, Fitch Ratings said.

According to the 3Q09 data, loans that are three months or more in arrears comprise 19% of the current loan balance, the same as in 2Q09, following seven quarters of consecutive increases.

"Stabilizing arrears levels are a positive sign for nonconforming RMBS transactions,” said Peter Dossett, associate director in Fitch's RMBS surveillance team. “However, they remain at historically high levels and therefore continue to represent a significant risk."

The reduction of loans in arrears is also matched by falling levels of loans currently in repossession, caused by fewer new repossessions and continued strong activity by servicers to dispose of repossessed properties.

The disposal of properties continues to generate high levels of loss for transactions, particularly those from recent vintages, and this continues to be the main driver of negative rating action, with 55 tranches downgraded during the last quarter.



Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.