S&P to Bar Some NJ Loans From Rated Deals

Meanwhile, Standard & Poor's has decided to exclude from its rated structured finance deals those New Jersey loans for which the new law allows assignee liability.S&P said loans falling in that category are those defined as Covered Home Loans, those defined as High-Cost Home Loans, home improvement loans, and manufactured housing loans, as well as loans that are cash-out refinancings or junior-lien mortgage loans. Damages for some of the loan categories are capped, the rating agency said. S&P pointed to a provision of the law that allows a borrower to elect to recover damages either under the act or under New Jersey's Consumer Fraud Act, which provides for treble damages plus costs. "Because Standard & Poor's believes the act is unclear as to whether a borrower may recover under the CFA in a suit against assignees for a violation under the act, Standard & Poor's believes it must adopt the more conservative approach and factor into its credit analysis the possibility that treble actual damages might be recoverable against an assignee," S&P said. The rating agency can be found online at http://www.standardandpoors.com.