Standard & Poor’s said it may downgrade 1,196 securities tied to U.S. residential mortgages after it “incorrectly analyzed” the bonds because of the way interest payments on the debt are structured. The securities were created mostly this year in 129 transactions called re-remics, which are formed by repackaging existing bonds backed by home loans, New York-based S&P said today in a statement. “An admission of guilt by a rating agency: How refreshing, and also what a wonderful Christmas-time present,” said Sylvain Raynes, a principal at R&R Consulting in New York and co-author of “Elements of Structured Finance,” published in May by Oxford University Press. “What I want to know is, is anyone going to get fired over this?” More than $85 billion of re-remics have been issued since the start of last year, as bondholders and Wall Street firms transformed downgraded home-loan securities into new debt, some of which receives top grades from rating companies, according to a Dec. 7 report by Austin, Texas-based Amherst Securities Group.
Jason Philyaw was a reporter with HousingWire through mid-2012.see full bio
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Jason Philyaw was a reporter with HousingWire through mid-2012.see full bio