The securitization market is turning a corner and is headed to some sort of equilibrium, said participants at the tools for conducting due diligence panel at Information Management Network’s (IMN) 15th annual ABS East gathering. The conference is being held this week in Miami Beach.
Panelists highlighted the fact that the ABS industry is increasingly looking at loan level data to assess the mortgage risk, instead of solely depending on ratings.
“Today we see people depending on loan level data that moves beyond the transition matrices’ of four years ago,” said Ned Myers, chief marketing officer at Lewtan Technologies. “As far as identifying macro economic trends, most of us missed it. We now have the tools in place — on the loan side, due diligence side and borrower side — and better property valuation, which means we can better understand how mortgages work within a securitization pool.”
However, panelists said that the loan modifications happening today might only be postponing the inevitable. They reiterated old concerns that modifications might simply be creating situations of redefault.