Fitch Report Highlights Trend in Loan-Loss Data

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A new report from Fitch Ratings found the percentage of loan principal a lender recorded as a loss after foreclosure was similar for agency and nonagency loans.

Loss severities on liquidated residential mortgages are similar across both types of loans when certain attributes such as property values and mortgage insurance are controlled for, the ratings agency said Monday in a press release.

However, depending on the individual loan attributes, loss severities in a transaction may differ from the aggregate historical data.

The Fitch report, titled “Insights into Freddie Mac Loan Loss Data,” analyzed residential loan data issued by Freddie Mac in November 2014.

Additionally, Fitch said in the report that mortgage insurance payouts have declined steadily in the years following the financial crisis. When MI claims are paid on foreclosed loans, lenders see notably lower loss severities for loans with loan-to-value ratios above 80% than for the loans between 60% and 80% LTV.

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