The ABX September remittance data did not exhibit anything dramatically different
compared with the previous month's results, according a to Merrilll Lynch analysts.
REO inventories generally continued to shrink and loss severities have either stayed flat or dipped, they said.
CDRs declined by up to three points across the indices on the heels of lower REO inventories. Merrill analysts also noted that delinquencies rose more this month versus last month.
The dip in CDRs does not explain the increase in the rate of change. This suggests, according to analysts, that the pace of delinquency increase is beginning to pick up again as the winter months approach.
Meanwhile, Merril analysts said modification rates remains low. The rates still have not picked up because less than 1% of loans across all indices were modified this month. They said that the rate of modification has come down significantly for RAMP and RASC deals. Recall that loan modifications were fairly rampant across these deals late last year. The slowdown in rate modification ties in fairly well with letters that investors have recently gotten seeking investor approval to eliminate loan mod caps from the PSAs.
The reports also showed high CDR even with the low REO inventory, according to Merrill analysts.
They said that CDRs for some deals (RAMP/RASC for indices other than 06-1) were fairly high (~ 25-20% CDR) inspite of having fairly low REO inventory (1% to 3%). This signifies, according to analysts, that there are perhaps more short sales occurring for these deals.