S&P Clarifies MA Loan Criteria

Standard & Poor's Rating Services has clarified its criteria for high-cost home loans in Massachusetts in view of recent amendments to the state's anti-predatory-lending regulations.S&P said it will continue to exclude Massachusetts "high cost home mortgage loans" (under the Massachusetts Predatory Home Loan Practices Act) from its rated structured finance deals. The rating agency said last year that such loans might be subject to indeterminate liability, preventing it from estimating their potential liability. S&P also noted that the definition of such loans was different from that of "high cost home loans" in the state's anti-predatory-lending regulations, which were not subject to indeterminate liability. Such "regulation loans" were permitted into S&P rated structured finance deals if its credit enhancement criteria were satisfied, as long as they were not also high cost home mortgage loans under the act. However, the Massachusetts Division of Banks recently amended the regulations to conform them to the act, and thus all regulation loans are now also high cost home mortgage loans under the act, the rating agency reported. S&P can be found online at http://www.standardandpoors.com.