Fitch Ratings, Moodys Investors Service, and Standard & Poors each entered into an identical cooperation agreement today with New York Attorney General Andrew Cuomo with the intent of restoring confidence and credibility to the mortgage markets.
The agreement, which runs for 42 months and will allow the agencies six months to fully implement, has two major provisions.
The first requires that the ratings agencies establish modified rating fee standards for non-prime RMBS issuance and enhance transparency by periodically pushing certain pool information for all non-prime RMBS transactions reviewed by the agencies.
Secondly, the agreement provides that the ratings agencies develop rating criteria for originator evaluations, originator and underwriter due diligence, and standardized representations and warranties.
The provisions of the agreement were implemented to promote better due diligence procedures by originators and underwriters and to increase the overall quality of information used in the ratings process.
Attorney General Cuomos office also terminated its inquiry of the ratings agencies on Thursday, which began in August 2007.