Bond Credit Quality Outlook Improves in First Quarter 2013 According to CoreLogic Bond Tracker
Real Estate Industry and Trade Media
Campbell Lewis Communications
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July 26, 2013, Irvine, Calif. –
—Housing Price Rise Stems Future Losses on Riskiest Bonds—
CoreLogic® (NYSE: CLGX), a leading residential property information, analytics and services provider, today released the 2013 CoreLogic Bond Tracker Quarterly Report for the first quarter of 2013.
CoreLogic Bond Tracker is a residential mortgage-backed securities (RMBS) bond assessment service that monitors more than 30,000 bonds backed by seasoned non-agency Alt-A, subprime, pay-option ARM and jumbo prime loans. It also provides a quarterly assessment of their credit quality and outlook. The report showed that in the first quarter of 2013, rising house prices and relatively low interest rates helped improve the outlook for the riskiest tranches of bonds as well as some of the most troubled vintages.
Deals that contain the highest percentages of delinquent and underwater loans are now more likely to perform instead of defaulting as housing prices rise—a significant savings. If they do liquidate, deals may now incur lower losses because recoveries are now higher, according to the report. For example, the report indicates lifetime losses on Subprime and Pay-Option ARMs (POA) were reduced by 823 and 552 basis points, respectively. The average losses in the distressed vintages of 2006 through 2008 also rebounded by at least 400 basis points.
Bonds at the lower end of the credit spectrum showed the most improvement: 5 percent more of the bonds entered the C category, most moving up from the D category. Other categories were relatively stable with prepayments and downgrades reducing the outstanding balance of AAA bonds by only 2 percent.
“Strong home price growth and historically low mortgage rates were key factors in the improvement that we saw in first quarter performance,” said Ben Graboske, senior vice president, Real Estate and Financial Services for CoreLogic. “While housing price gains continued in the second quarter, they have been accompanied by interest rate increases that could decrease future benefits for ARM-backed bonds.”
CoreLogic Bond Tracker provides life-of-bond surveillance and incorporates a wide range of risk factors including property value changes and other market-impacting events.
A complimentary assessment on a cohort-level of a universe of non-agency RMBS securities is published quarterly. The Bond Tracker Quarterly Report also offers customized assessments of individual non-agency RMBS bonds, tranches and portfolios on a subscription basis with cost-effective introductory rates that vary by volume, level of service, and length of engagement.
For more information about CoreLogic Bond Tracker, go to http://www.corelogic.com/landing-pages/corelogic-bond-tracker.aspx.
CoreLogic is not registered as a nationally recognized statistical ratings organization (NRSRO) and as such, CoreLogic Bond Tracker does not constitute a NRSRO credit rating.
CORELOGIC and the CoreLogic logo are registered trademarks owned by CoreLogic, Inc. and/or its subsidiaries.
CoreLogic (NYSE: CLGX) is a leading property information, analytics and services provider in the United States and Australia. The company’s combined data from public, contributory and proprietary sources includes over 3.3 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, transportation and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in seven countries. For more information, please visit http://www.corelogic.com.