Fitch Increasingly Downgrades Non-Subprime [Housing Tracker]

 |  Includes: FMCC, FNMA, TGIC
by: Judy Weil

Mortgage Data 

Morgan Stanley Said to Freeze Home-Equity Credit Withdrawals. “Sources: Morgan Stanley, the second-biggest U.S. securities firm, told thousands of clients this week that they won't be allowed to withdraw money on their home-equity credit lines… Most of the clients had properties that have lost value. [The] investment bank will review home-equity lines of credit, or HELOCs, monthly from now on… Consumers fell behind on home-equity credit lines at the fastest pace in two decades in the first quarter, the American Bankers Association reported last month.” (Bloomberg, Aug. 6)

Fitch Takes Hatchet to Alt-A, Prime RMBS Ratings. Fitch Ratings: The number of deals affected by deteriorating collateral performance — particularly among Alt-A and prime jumbo securitizations — are seeing ratings tumble at a record pace to start August. On Monday alone, Fitch downgraded or put on negative watch 2,655 classes from 190 different deals, both prime and Alt-A, and all from 2005 to 2007 vintages. And that was after downgrading or putting on watch 4,441 classes from 256 separate deals on Friday — last week’s cuts included a large chunk of pre-2005 prime and Alt-A securitizations, as well… Between Friday and Monday, Fitch [downgraded] 7,061 securities from 446 deals. And nary a subprime loan in the bunch.” (Housing Wire, Aug. 5) 

Originations On Pace for 18 Percent Drop in 2008: Report. “Industry research and forecasting think-tank iEmergent: Total dollar volumes of mortgage originations in 2008 are on track to fall as low as $1.94 trillion, as tighter credit standards and a dearth of subprime lending take a bite out of industry volume. Originations would likely fall in a range of $1.94T-$2.1T, depending primarily on refinancing activity throughout the remainder of the year. Refinance volume was projected to range between 5.4 million loans for $997 billion on the low end, and 6.3 million loans for $1.16T— meaning that whether the industry crosses the $2T mark this year will depend largely on where interest rates (and, by extension, refinancing) head throughout the balance of 2008.” (Housing Wire, Aug. 4)

Mortgage Insurers See Applications Fall in June. “Members of the Mortgage Insurance Companies of America… received just 90,896 applications for mortgage insurance… during the month, less than half of year-ago totals, and roughly 17% below the number of applications received in May. Insurers have been forced to tighten their eligibility guidelines as 2008… home prices continue to fall and a steady stream of insured borrowers default… put[ting] many insurers directly into the bull’s eye for ratings downgrades; one insurer so far, Triad Guaranty Inc. (OTC:TGIC) has seen its MI subsidiary head into runoff after Fannie Mae (FNM) and Freddie Mac (FRE) yanked their authorization for the insurer to underwrite new business for the GSEs this past June.” (Housing Wire, Aug. 1)


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