Volume 2014 - Number 35
September 19, 2014
Fitch’s Change to Home Price Modeling Could Reduce Credit Enhancement Requirements on Non-Agency MBS
Fitch Ratings this week proposed changes in how it models home prices for loans to be included in new non-agency MBS. The change means more regions being classified as having sustainable home prices, which could lead to lower credit enhancement requirements on new securities. “The updated Sustainable Home Price model shows a stronger relationship to historical home prices and effectively distinguishes between periods of sustainable and unsustainable home prices,” the rating service said. “Under the new methodology, Fitch’s estimation of overvaluation is typically lower than in the previous model build.” Fitch has incorporated...
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This weekly covers the secondary mortgage market, including mortgage-backed securities and asset-backed securities.
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