The October ABX remittance reports exhibited the same major trends that have been seen over the last few months, according to Bank of America/Merrill Lynch analysts.
The REO inventories have decreased again this month, with servicers continuing loan mod evaluations.
The overall delinquencies continued to rise, with the 90+ DQ bucket increasing across all the indices. Foreclosure buckets, on the other hand, were more mixed with some decreasing slightly while others grew.
BofA/Merrill reported that CDRs were down once again across the indices. Severities, on the other hand, rose 1-2 points across the indices after remaining flat to down in the last few months.
The modification rates are still low and are even decreasing in some cases except in the 06-1 series. The series experienced a slight uptick.
The modification rate in RAMP and RASC transactions has come down dramatically. Many of the
deals are currently experiencing the total outstanding modifications dip with liquidations and
payoffs outpacing new modifications.
Even though there have been letters to investors sent out over the last couple of months asking for approval to remove the modification caps in these transactions, caps are probably not the sole reason for the dramatic slowdown.
In some deals the modifications are comparatively far from their cap. For example, in the RASC 2005-KS11 deal has a 15% cap but total outstanding modifications as a portion of the deal cut-off balance is merely about 10%.
Some of the slowdown may simply be related to a total shift toward the Home Affordable Refinance Program (HAMP). Based on conversations with servicers, Bofa/Merrill analysts said it seems that some will continue to modify along side of HAMP. Other servicers, on the other hand, will likely adopt the program as their sole modification program.
Meanwhile, analysts reported that those who were actively modifying mortgages prior to and who will transition to HAMP completely will probably see a considerable slowdown in modifications initially.