S&P Eyeing Georgia Law

Standard & Poor's is concerned that mortgages not purchased by the government-sponsored enterprises due to Georgia's strict new lending law may increasingly be placed in securitized transactions it rates.The rating agency said the development holds the potential for adverse selection in the nonconforming market and, as a result, "will continue to monitor the developments of this legislation and similar legislation pending in other states and adjust its requirements accordingly to ensure investors are not exposed to undue risk." The rating agency said that it currently "prefers a representation and warranty be added to transactions, as applicable, stating no loans are classified as either high cost or covered." in pools containing loans affected by the law. S&P can be found on the Web at http://www.standardandpoors.com.