Delinquencies among alt-A residential mortgages packaged into residential mortgage-backed securities fell in May, extending a decline that began in April when the rate fell for the first time in four years, Fitch Ratings reported on Monday.

Alt-A RMBS delinquencies declined to 33.9% in May, from 34.1% in April. A year earlier, they were at 28.3%. Fitch said last month that delinquencies in April had dropped month-over-month for the first time since April 2006.

Fitch also said subprime delinquencies fell in May, to 44.8% from 45.2% a month earlier. A year ago, the rate was 40.7%.

The ratings agency cautioned that, despite the improved performance, about 9% of current alt-A loans and 37% of subprime loans are modified and "have a substantial risk of redefault." Many borrowers in recent years have again fallen behind on their mortgages even after restructurings.

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