Serious delinquencies among alternative-A loans packaged into residential mortgage-backed securities dropped for the first time in four years, "which may be a signal that RMBS performance is beginning to turn the corner," Fitch Inc. said Monday.

Alt-A delinquencies dropped to 34.1% in April from 34.4% in March, the first month-over-month decline since April 2006. A year earlier, delinquencies were 27.4%.

Fitch credited higher cure rates, an increased volume of loan modifications, and better liquidation and roll rates.

"The next few months will be a better indicator of whether we're witnessing the beginnings of a legitimate turnaround or a short-term seasonal effect of tax refunds," said Fitch Managing Director Vincent Barberio.

Alt-A loans were typically given to prime-rated borrowers who generally chose not to document assets and/or income. Fitch also said subprime delinquencies dropped for the second straight month, to 45.2%, from 46.3% in March. A year earlier the delinquency rate was 40.1%.

The rating agency cautioned that despite the improved performance, about 8% of current alt-A loans and 35% of subprime loans are modified and "have a substantial risk of redefault."

In the past several years borrowers kept falling behind on their mortgages even with the new terms of restructured loans.

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