MBS investors can expect fewer scratches and dents in non-agency MBS portfolios, according to a new analysis from Moody’s Investors Service that says houses are less likely to lose value in a recovering market and modified loan recoveries are increasing as borrowers make more payments before re-defaulting. Part of the story is that the market is seeing higher recoveries for defaulted modified mortgages than for unmodified defaulted loans. “Even though modifications on loans that were eventually liquidated in 2010 and 2011 exposed the properties to further price depreciation by delaying their liquidation, those modified loans on average still realized higher recoveries than did defaulted unmodified loans,” analysts at Moody’s said. “This is because loan modifications, even failed ones, usually enable...