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Broad questions about the future of U.S. housing finance and the direction of the residential mortgage market continue to cloud the outlook for U.S. residential mortgage-backed securities (RMBS), in the view of Standard & Poor’s Ratings Services. While home prices and delinquencies generally seem to be stabilizing, the future performance of outstanding residential mortgage bonds will depend on a number of factors that are difficult to predict.
We believe that if the U.S. economy remains broadly stable, the performance of U.S. RMBS issued before 2008 depends on three key variables: collateral performance, the effectiveness of structural protections, and the behavior of key transaction parties like servicers and bond trustees. Each of these factors is an important aspect of our surveillance analysis of the RMBS transactions we rate.
In our view, U.S. home prices and residential mortgage delinquencies appear to be stabilizing, but three key variables will direct the performance of rated RMBS going forward:
To download our full report, title="RMBS" href="http://ow.ly/d/FpK">click here.
Read more at Standard & Poor’s HousingViews