Delinquencies to Rise in Mexico RMBS

Fitch expects a continued increase in delinquencies within most of the UDI-denominated transactions originated by Mexican Sofoles, although a rebound in the economy and employment, an increase in collections efforts and a successful loan modification program on selected loans would allow for the potential for stabilization during the second half of 2010. Already in February Fitch had downgraded the ratings of 10 tranches and reaffirmed 2 ratings. All of these tranches were related to transactions backed by UDI mortgages originated by Sofoles/Sofomes, the ratings agency says. Fitch anticipates further negative rating actions on transactions that have experienced a significant deterioration in credit enhancement due to asset performance, particularly those serviced by financial entities with below-average servicer ratings.