Barclays Capital analysts expressed concern about the "slowdown in the current-to-delinquent roll rate improvement" in a report released yesterday.
Even though there are signs that indicate home prices have bottomed out, Barclays analysts warned that unemployment will worsen in the near term. This is why a further weakening in roll rates cannot be ruled out.
Nevertheless, Barclays analysts said that roll rates are improving at a quicker rate than most models would predict in terms of compositional credit burnout. They also projected the performance improvement of all kinds of current borrowers in the back end.
Additionally, analysts said that there was a significant uptick in foreclosure initiations in June across all servicers. For instance, the 60+day to foreclosure roll increasing by 2% to 6% in Jumbo and subprime and 3% to 10% in Alt-A.
They also predicted that the roll rates will continue to stay on the high side given that the Attorneys General $25 billion foreclosure settlement is no longer an issue. But, analysts also reported that completed foreclosures are still slow. The report also stated that the foreclosure-to-REO roll rates stayed stable versus the previous month.
The current-to-delinquent roll rates was comparatively flat month-over-month in the June remittances across all sectors. Likewise, the always current-to-delinquent roll rates were also relatively flat across sectors, analysts said. Remaining close to the improvement levels over the last two months, year-over-year improvement was also steady. They said that the long-term trend of improving roll rates is still the same.