S&P to Rate Deals With NY Loans

Standard & Poor's Ratings Services has announced that it will rate structured finance transactions that include New York loans governed by the state's predatory lending law (which takes effect April 1), provided that any potential assignee liability is covered in full under S&P criteria.S&P said the law sets forth calculations and thresholds for determining what constitutes a high-cost loan, so lenders who wish to avoid making them should be able to do so. "For lenders that choose to make high-cost loans, the law prohibits certain practices and sets forth certain tests that must be adhered to," S&P said. ".... [V]iolations could result in liability for the originator of the high-cost loans as well as for purchasers and assignees." The liability -- in the form of a set-off or counterclaim to foreclosure actions or other actions to collect on delinquent loans -- is capped, but it may exceed the unpaid principal balance of the loan, S&P said. For deals that do not include high-cost loans, S&P will require the issuer to provide a representation and warranty to that effect. For other deals, the issuer must warrant that the high-cost loans comply with the law. S&P can be found online at http://www.standardandpoors.com.