News that U.S. pending home sales improved 2.1% between January and February is a positive for the housing market and for "'the underlying collateral performance of U.S. residential mortgage-backed securities," Standard & Poor's analyst Erkan Erturk said this week. According to data from the National Association of Realtors, February home sales grew month-over-month by 2.1%, following a 9.6% decline in existing home sales the prior month and a 16.9% decline in new home sales. Even still, the pending home sales index is 8.2% lower than year ago levels and 30% below peak market levels from 2005. RMBS will benefit from the report since the February sales increase may suggest an additional rise in existing home sales for the month of March, S&P said. Ratings on residential mortgage-backed securities have been rocky as of late, with Moody's Investors Service (MCO) recently downgrading several additional batches of RMBS, including a group of Alt-A RMBS securities valued at $1.3 billion issued by 11 different entities. Residential mortgage-backed securities face other risks aside from home sales, including an onslaught of legal cases filed against Mortgage Electronic Registration Systems, or MERS. The cases threaten to forestall the already extended foreclosure process, with parties objecting to MERS' legal standing when it comes to various legal proceedings, including foreclosures. Write to Kerri Panchuk.