Fitch Won't Rate MBS With High-Cost KY Loans

Fitch Ratings will not rate residential mortgage-backed securities containing high-cost loans from Kentucky, the rating agency has announced.Fitch cited the uncapped assignee liability on high-cost loans as the reason for its decision, which came several days after Kentucky's anti-predatory lending law took effect June 24. Kentucky’s law does have a safe-harbor provision, saying that purchasers of loan pools are liable only if the violation is apparent on the face of the disclosure and promissory note. But Fitch said the process for determining the standard is too vague. Rival rating agency Standard & Poor's recently announced that the safe harbor allowed it to continue rating RMBS transactions with high-cost loans from Kentucky. Fitch can be found online at http://www.fitchratings.com.