Nonetheless, a defaulted structured finance security that is supported by the cash flow of the underlying assets, may receive cash flow from both interest and principal, according to a new S&P report, "Life After Death: Recoveries of Structured Finance Securities," by Joseph Hu. And, unlike a typical defaulted security such as a corporate bond, he writes that the cash flow is often substantial.

The report notes that since 1988 there have been 83 residential mortgage-backed securities that have defaulted as have 14 CMBS and 19 asset-based securities. Their recoveries averaged 61%, 66% and 29%, respectively.

The complete report is available to subscribers at www.ratingsdirect.com.