The performance of outstanding U.S. manufactured housing (MH) residential mortgage-backed security (RMBS) loans has remained relatively stable despite the housing and mortgage market turmoil over the last several years, according to Fitch Ratings.
In response, Fitch has taken various rating actions on all 145 of its rated MH RMBS transactions. Roughly 65% of classes rated B or higher at the time of the review were affirmed at their rating category.
Approximately 23% of classes rated B or higher were upgraded due to an improvement in the relationship between expected collateral loss and credit enhancement. The remaining 12% of classes rated B or higher were downgraded. Of those classes rated below B coming into the review, 33% were affirmed, 3% were upgraded and 64% were downgraded.
The actions reflect Fitch's expected collateral loss on the mortgage pools and cashflow analysis of each bond. The average updated expected collateral loss for the MH transactions is approximately 24% as a percentage of the remaining pool balance and 23% as a percentage of the initial pool balance.
The updated expected collateral losses reflect the relatively stable performance trends observed in the sector over the last several years.
"Significant seasoning of manufactured housing loans has played a large role in this stability, with approximately 90% of the transactions having been issued prior to 2001," says Vincent Barberio, managing director in Fitch's RMBS group. "Manufactured housing deals have also benefited from several servicing acquisitions and higher recoveries on liquidated properties."
A spreadsheet detailing Fitch's rating actions on the affected transactions can be found on Fitch's Web site by performing a title search for "MH RMBS Rating Actions for November 17, 2009."
SOURCE: Fitch Ratings