Citing excellent compliance with its high-cost loan criteria, Fitch Ratings has announced that it will no longer require third-party reports for rated transactions at the time of closing for loans originated in New Jersey, New Mexico, Kentucky, Massachusetts, and Indiana.The rating agency said compliance systems have become a critical component of the underwriting and quality control process, and the revisions to its residential mortgage-backed securities guidelines recognize the industry's progress in managing compliance with anti-predatory-lending laws and regulations. Kevin Cuff, president of the Massachusetts Mortgage Bankers Association, said the industry is still waiting to see how the new Massachusetts law will affect the market, since it has only been in place for two months. "Fitch is recognizing how we all feel in the state," Mr. Cuff said. "We're in a wait-and-see period to see how compliance will go -- to see if it's effective and to make sure there's consumer protection while continuing to provide adequate access to credit for consumers. No one is throwing their arms up and saying people are leaving the state." Fitch had previously said the laws in the five states might expose RMBS issuers to unlimited assignee liability for damages resulting from high-cost loans.

Subscribe Now

Authoritative analysis and perspective for every segment of the mortgage industry

30-Day Free Trial

Authoritative analysis and perspective for every segment of the mortgage industry