OREANDA-NEWS. Fitch Ratings has updated its rating criteria report for Mexican RMBS that are sponsored by commercial banks and Sofoles/Sofomes.

Updates to the criteria includes the revision of assumptions related to the expected base case Frequency of Foreclosure (FoF), reverting back to Fitch's long-run base case FoF because of the stable macroeconomic expectation for the country, as well as the stable trends observed in delinquencies of mortgage portfolios.

The agency has also established additional stresses related to recovery timing for RMBS transactions that have been impacted by servicer substitutions as performance continues to vary depending on fee structures and overall incentives of the specific servicer.

Finally, while most of the loan modification programs applied to delinquent loans were meant to benefit from a more expedited repossession procedure, as the borrower is required to sign a judicial agreement, historical performance data has not supported this assumption. In this way, the foreclosure process for these modified loans will be treated similar to the foreclosure process for a regular loan.

There are some RMBS transactions already placed on Rating Watch Negative or assigned a Negative Outlook as a result of the additional delays in foreclosure timing and processing of mortgage insurance. These transactions are being monitored and depending on their performance may see some rating impact as a result of the changes in criteria.

The updated criteria report replaces the report of the same name dated July 28, 2014, and is available at www.fitchratings.com.