Moody's to Rate RMBS With High-Cost NJ Loans

Moody's Investors Service has announced that, unlike Standard & Poor's Ratings Services and Fitch Ratings, it will continue to rate some residential mortgage-backed securities containing home loans defined as high-cost by the New Jersey Home Ownership Act.Moody's said, however, that the way it assesses the risk of high-cost home loan refinances will likely "eliminate their inclusion in future deals." The rating agency also said it will generally accept loan pools where no more than 2% of loans are high-cost New Jersey home loans, as long as those loans are purchase loans that "fit neatly within clear, objective standards for compliance." It set less strict requirements for covered home loans, a category defined by the law as being between high-cost home loans and home loans. For home loans that are not high-cost or covered loans, Moody's said it would only require appropriate due diligence for inclusion in RMBS transactions.