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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (298279)	12/15/2010 4:53:13 PM
From: DebtBomb	Read Replies (3) \| Respond to of 306849

S&P May Downgrade Securities Tied to Residentiual Mortgages Jody Shenn, On Wednesday December 15, 2010, 4:17 pm Standard & Poor’s said it may downgrade 1,196 securities tied to U.S. residential mortgages after it “incorrectly analyzed” the way interest payments on the debt are structured. The bonds were created mostly this year in 129 transactions called re-remics, which are formed by repackaging existing securities backed by home loans, New York-based S&P said today in a statement. “Our written statements are what we are providing,” Ed Sweeney, a spokesman for the rating firm, said in an e-mail. He declined to comment further and didn’t answer an e-mailed question about the principal balances of the securities under review. More than $85 billion of re-remics have been issued since the start of last year, as debt holders and Wall Street firms transformed downgraded home-loan securities into new securities, some of which received top grades from rating companies, according to a Dec. 7 report by Austin, Texas-based Amherst Securities Group. Bank of America Corp., based in Charlotte, North Carolina, and Bank of New York Mellon Corp. are among financial companies that turned to re-remics in the past two years as they restructured mortgage-bond holdings to lower the amount of capital they needed or to reduce their investments. Repackaging Process In re-remics, typically senior-ranked mortgage securities or a series of the bonds get split into new debt, some of which ranks higher than the rest. The process mirrors the original securitization of the loans. When S&P initially assessed the likelihood that the re- remics now under review would fail to pay scheduled interest, it “did not incorporate an analysis” of the effects of some re- remics paying interest to multiple classes in equal amounts, instead of sequentially in order of seniority, according to two statements by the ratings company. “Previously, we incorrectly analyzed the timely interest payments,” S&P analysts Jeremy Schneider and Becky Cao said in one of the statements. finance.yahoo.com