Persistent servicer challenges and declining recovery rates color the performance of Sofoles-sponsored transactions, according to a new Fitch Ratings special report about Mexican RMBS.
Performance varies across three segments: transactions sponsored by government entities Infonavit and Fovissste perform well; bank RMBS exhibit mixed credit metrics; and non-bank-sponsored transactions backed by Sofoles loans remain stressed.
Almost one-third of the Sofoles-sponsored RMBS portfolio rated by Fitch is 180+ days delinquent. Late-stage delinquencies signal more REOs in 2013, particularly since legal hurdles impeding liquidations have been resolved.
This non-bank segment continues to adapt to complications related to primary servicer substitutions that began in 2010. Some early evidence shows that portfolios with performance-based fee structures perform better than transactions with fixed-rate servicing contracts.
Relative to the non-bank segment, bank-sponsored RMBS perform well with minimal delinquencies and REO liquidations. However, within this segment, HSBC Mexico-sponsored transactions suffer from liquidity pressure and poor asset quality.
For more information, the full special report 'Mexican RMBS Update: Servicer Challenges, Declining Recoveries Point to Mixed Performance' is available at www.fitchratings.com or by clicking on the link above.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Rating Criteria for RMBS in Latin America' (Feb. 16, 2012);
--'RMBS Latin American Criteria Addendum - Mexico' (Aug. 2, 2012';
--'Continued Deterioration for Mexican RMBS' (Oct. 24, 2011).