By Warren Kornfeld, Vice President-Senior Analyst, Moody's Investors Service

The market for non-performing and reperforming Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) residential mortgage loans had historically been a niche segment. However, in 2002, Moody's estimates that approximately $20 billion of FHA/VA reperforming and non-performing securitizations were issued, up from approximately $7 billion in 2001. Record volume may again be achieved in 2003, depending on interest rate fluctuations, although this is a difficult market to forecast. Below is an excerpt from a soon-to-be-published special report titled Moody's Approach to Analyzing Non-Performing and Reperforming FHA and VA Loans, which will be available on

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