Standard & Poor's announced that it is requesting comments on its proposed guidelines relating to RMBS servicer' loan modification practices and the reimbursement of capitalized loan amounts in U.S. RMBS transactions.
Among the new guidelines is the addition of loan modification limits or potential loan modifications into analysis when reviewing the proposed structure and credit support at the start of a transaction.
Additionally, S&P suggests excluding modified loans from any loan modification limit calculation once they have passed the modification performance test.
Other guidelines include adding any principal amounts that have been forgiven as part of a loan modification to the cumulative loss trigger calculation, and including additional information and calculations relating to loan modifications in remittance reports. In instances where the transaction documents allow for capitalization reimbursement amounts to be paid from total principal and interest collections, the credit enhancement requirement may be adjusted accordingly.
Comments are requested by July 1, and can be sent to email@example.com. The complete criteria can be viewed on the agency's Website www.ratingsdirect.com.