Top Performing Housing Market Pays Highest Effective Mortgage Rates

NEW YORK, Octpber 12, 2012 - A research report published today by Opera Solutions found that Texas - one of the best performing housing markets since the onset of the credit crisis - also pays one of the highest weighted average coupon rates on its mortgages, representing one of the most significant mispricing of risks in the Non-Agency RMBS marketplace. The finding came from the analytics firm's inaugural edition of Mobiuss Market View, a monthly market commentary covering the private label RMBS marketplace.

"It's striking to see how the state that has maintained the best LTVs throughout the crisis is also paying the highest weighted average coupon among major markets," said Bill Hunt, Vice President and Mobiuss Market View author. "This fact has interesting ramifications on everything from prepayments, defaults and loss severities to credit support for bonds exposed to Texas borrowers and properties."

The report includes a broad range of additional new insights, such as how record low interest rates can both benefit and undermine deals collateralized by ARM loans, and how servicers who were more active in modifying loans have realized lower loss severities than those who have been more reluctant to modify. "It appears that those servicers who aggressively modified are currently outperforming their peers in term of loss severity. Tracking this relationship month-to-month will show which modification strategy returns the most benefit over the long-term," Hunt added.

Mobiuss Market View is a monthly market commentary based upon the data, analytics and tools embedded within Opera Solutions' Mobiuss platform for analyzing the risks and values of mortgages and mortgage backed securities. The report and other insightful research on the mortgage market can be accessed at www.mobiuss.com.

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