Fitch Ratings, like Standard & Poor's, is saying "no" to rating securitizations containing high-cost Massachusetts loans because of "heightened assignee liability" stemming from the state's Predatory Home Loan Practices Act.The law, which goes into effect Nov. 7, applies to "high cost home mortgage loans" secured by a borrower's principal dwelling. It excludes reverse mortgage loans, but includes most other mortgage types such as open- and closed-end and first- and second-lien loans. The annual-percentage-rate threshold is breached if the spread above the comparable maturity Treasury security exceeds 8% for first-lien loans, or 9% for second-lien loans. A loan would also be classified as a high-cost mortgage if its total points and fees exceed 5% of the total loan amount or $400, whichever is greater, Fitch said. A "safe harbor" is allowed, and the purchaser must have a policy in place that prohibits the purchase of high-cost home mortgage loans. The seller must exercise reasonable due diligence at the time of purchase of the loan.

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