Tag Archives: Fitch Ratings

The cumulative default rate for commercial mortgage-backed securities (CMBS) in the U.S. rose over the third quarter, largely due to an increase in defaults among office loans, according to the latest data from Fitch Ratings. The rate rose from 13.2 percent in the second quarter of this year to 13.5 percent in the third quarter, according to Fitch. Office loans made up more than half of both newly defaulted loans in the third quarter and year-to-date defaults, according to the ratings agency.

Ocwen made some waves when it announced an agreement to acquire Homeward Residential Holdings in a nearly $750 million deal, but Fitch Ratings is doubtful about the move. The ratings agency announced it has placed Ocwen's "B" long-term Issuer Default Rating (IDR) on Rating Watch Negative following the financial corporation's announcement.

Performance on vintage prime residential mortgage-backed securities (RMBS) continues to degrade, Fitch Ratings revealed in a report.

The housing market is seeing signs of recovery, and this recovery may be bolstered by the new representation and warranty framework the Federal Housing Finance Agency announced Tuesday, according to Fitch. Relying on signing offers and home tours as a future indicator of home sales, Redfin, a technology-driven real estate broker, predicts the market improvement seen this summer will continue into the fall. Offers fell 4 percent in August.

Adverse selection is leading to rating downgrades for ├â┬ó├óÔÇÜ┬¼├àÔÇ£one of the strongest U.S. residential mortgage vintages,├â┬ó├óÔÇÜ┬¼├é┬Ø the pre-2005 vintage, according to Fitch Ratings. Residential mortgage-backed securities formed before 2005 "have historically performed well," according to Fitch. In fact, more than 93 percent have already been repaid in full, and principal losses account for less than 1 percent of the $650 billion vintage. Fitch has placed several classes from the pre-2005 vintage on "Rating Watch Negative."

The slowing pace of workouts hasn├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ót stopped CMBS special servicer volume from falling, Fitch Ratings reported. According to Fitch├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós weekly U.S. CMBS Market Trends newsletter, the balance of loans in special servicing as of June 30 was $80.5 billion, a drop from $83.1 billion at the end of 2011 and $85.6 billion in June 2011. This news comes despite a slowdown in resolutions in the year├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós first half, with 1,242 loans resolved in that time (compared to 1,556 in the first half of 2011).

The Consumer Financial Protection Bureau strikes once more ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô against the little guy, according to recent reports. One of those came from analysts with Moody's Investors Service on Thursday. Their report suggests that a tide of new rules from the credit bureau will likely impose "costly" and "challenging" new costs on small to midsize servicers. As for the bigger guys? Analysts say they may just walk away from the rules without a scratch. And theirs isn't the first report to say as much. Read more to learn why.

Clearer monthly mortgage statements, warnings before interest rates adjust, quick correction of errors ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô these are among the proposed rules for mortgage servicers from the Consumer Protection Financial Bureau. The ratings agency stated one key change with the proposed CFPB rules is that it applies to banks and nonbanks of all sizes and types, and for smaller institutions, the impact of compliance costs is believed be even greater compared to the largest banks.

Fitch Ratings released a note Thursday stating that Fannie Mae and Freddie Mac won├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ót be slowing down on repurchase requests and focus seems to be shifting from the largest institutions to midtier regional banks. If this does happen, the rating agency said those banks will start to feel the pressure for claims-related earnings. Fitch said recent announcements from PNC, Suntrust, and First Horizon expressed an intent to increase reserves against future repurchase claims, which suggests Fannie and Freddie may be eying regional institutions.

Fitch Ratings downgraded mortgage servicer ratings for Litton Loan Servicing LLP following Litton's acquisition by Ocwen Financial Corp. The agency cut Litton's product servicer ratings in a number of categories, dropping them from RPS1 to RPS3. In addition, Litton's servicer rating for manufactured housing product dropped to RPS3 from RPS2, and its residential special servicer rating fell to RSS3 from RPS1. These drops illustrate a fall from Fitch's highest standards of servicing to average. The ratings downgrade comes in light of Ocwen's acquisition of Litton last year.