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The Return of Non-Prime U.S. RMBS (What Investors Need to Know)

fitchratings.com | January 25, 2017

A new non-prime mortgage market is beginning to emerge in the U.S., almost 10 years after the subprime and Alt-A mortgage markets shut down amid dramatic underperformance. Fitch Ratings expects a notable increase in newly originated non-prime RMBS activity in 2017, though on a significantly smaller scale and with a higher credit quality than pre-crisis origination volume.

The recently published report The Return of Non-Prime RMBS provides an introduction to the developing sector and a summary of pre-crisis risks that have been addressed, those that remain, and new risks that have emerged since the crisis. The report includes volume trends, early performance trends and a quick overview of early market participants.

The sector has seen a number of key improvements since the crisis, including legislative and regulatory changes that establish meaningful new standards and increase liability for lenders that make poor quality loans. Lenders have responded with operational enhancements that improve manufacturing quality, which is confirmed with third-party due diligence.

Several new risks have been introduced in the reemerging sector, including a reliance on bank-statements for income documentation for a meaningful percentage of the borrowers and the lack of precedent on how courts will interpret new laws, such as the Ability-to-Repay rule.

Fitch has increased its loss projections and rating stress assumptions significantly from pre-crisis levels, but, even with additional credit enhancement, some new issuers may not be able to achieve a ‘AAAsf’ rating until a longer track record is established.



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Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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