In light of recent amendments to the New Jersey Home Ownership Security Act, Moody's Investors Service says certain New Jersey high-cost home loans originated after July 6, the effective date of the amended law, may be included in residential mortgage-backed securitizations without increasing risk to investors.The amended act does not have retroactive effect, the ratings agency said. Moody's will assess whether high-cost home loans or covered home loans subject to the original act, which went into effect Nov. 27, 2003, may be included in securitizations on a case-by-case basis. Under the new law, "flipping" is no longer a prohibited practice, and Moody's indicated that a high-cost home loan transaction could generally pass muster if 2% of the pool or less consists of purchase-money or refinanced high-cost home loans that fit neatly within clear, objective standards of compliance. This tolerance range could be reduced if the securitization trust faces exposure to other predatory lending statutes. Moody's said it will consider the adequacy of an issuer's compliance procedures, whether the loans included in the pool are purchase or refi, and the issuer's financial strength. Moody's can be found online at http://www.moodys.com.

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