Rising U.S. home prices haven’t boosted the performance of mortgage bonds as much as might be expected, and Fitch Ratings says this is due to the length of time – and amount of money – it takes to sell repossessed homes.

Home prices have increased roughly 14% nationally and 30% in California since the fourth quarter of 2011. That suggests banks should be able to command higher prices for homes that they repossess, all other things being equal, than they could a couple of years ago. Yet loss severities, the amount of principal that is not recouped upon sale, have only improved 5% over the same time frame, according to Fitch.

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