Positive developments in the housing industry have encouraged the SVB Asset Management credit team to re-evaluate mortgage-backed securities (MBS). MBS came under fire during the financial crisis due to the struggles of housing agencies Fannie Mae and Freddie Mac.
Recent reports are providing us with hopes of green shoots in the housing market. The seasonally adjusted mortgage delinquency rate fell to 7.4 percent as of September 2012 as reported by Mortgage Bankers Association. This compares favorably to the high of 10.1 percent in early 2010 and 7.6 percent just a quarter earlier. The Case-Shiller Home Price Indices indicated improvement in house pricing with the 10- and 20-City Composites reporting higher home prices in August 2012 vs. July 2012 and annually. Although house prices are not expected to improve substantially in the near term, these statistics point to signs that the housing market may have bottomed.
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