Servicing of non-agency residental mortgage backed securities continues to shift from banks into the hands of non-banks, and this trend could drive more realized losses, according to Fitch Ratings.

Banks have been exiting the mortgage servicing business because new capital requirements make it less attractive to keep these rights on their books. Fitch expects this trend to continue as additional large mortgage servicing right (MSR) transfers are scheduled to be completed in the second half of 2013.

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