Moody's: NYC Law No Risk to MBS

New York City's predatory lending statute does not increase the risk to residential mortgage securitizations, according to Moody's Investors Service.Moody's said the statute does not affect the collectability of the loans or create the risk of financial liability for the trusts. The statute, which took effect Feb. 18, differs from many other predatory lending laws in two ways, the rating agency said. "First, the penalty for violation does not impose direct monetary damages on assignees, such as securitization trusts, or void the loan," Moody's said. "Instead, the offending party is prohibited from doing business with New York City if it is a 'predatory lender' within the meaning of the statute. Second, the statute includes a defined safe harbor by which a lender can comply with the law." Moody's can be found online at http://www.moodys.com.