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Fitch Analyzes GSE U.S. Mortgage Credit Risk As Risk Sharing Nears

Monday, July 1, 2013 11:10 AM


Fitch Analyzes GSE U.S. Mortgage Credit Risk As Risk Sharing Nears

Link to Fitch Ratings' Report: GSE Mortgage Credit Risk Analysis
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=711389

U.S. mortgage loans recently acquired by Fannie Mae and Freddie Mac will outperform historical levels, according to Fitch Ratings in a new report.

With plans of engaging in credit risk transfer transactions in the works, the GSEs have publicly released for the first time ever historical mortgage loan-level credit performance data. The risk-sharing transactions will allow the GSEs to sell credit risk to the private market and to gradually reduce their dominant role in housing finance.

Fitch has completed an analysis of the historical data to help investors evaluate upcoming credit-sensitive securitization proposals from the GSEs, becoming the first rating agency to publicly release its results. The analysis uncovered several notable credit trends, most obviously an improvement in credit quality in recent vintages.

'Similar to what we've observed in the private market, post-crisis GSE originated loans have recorded strong performance to date,' said Managing Director Rui Pereira. 'The recent performance reflects both better credit quality and improved underwriting controls.'

In the report, Fitch compares the agency performance to non-agency prime jumbo collateral and offers indicative default expectations for a hypothetical pool of newly originated agency loans.

Fitch's 'GSE Mortgage Credit Risk Analysis' is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

(Source: Business Wire )
(Source: Quotemedia)

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