Standard & Poor's has set guidelines for the submission by issuers of marketing materials and applicable operative documents for RMBS deals, noting that these documents had previously been distributed to the rating agency closer to the transaction settlement date, thus giving less time for review.

S&P recently requested issuers that for all RMBS deals closing on or after Nov. 1, 2004, principal operative documents - such as pooling and servicing as well as mortgage loan agreements containing all necessary data including bond size, coupons and cash flow mechanics - be submitted for review by 9:00 a.m. New York time two business days before settlement or risk losing S&P's rating.

The rating agency, however, will also accept submission of operative documents by 9:00 a.m. New York time the business day before closing if the rating agency receives a finalized marketing document two full business days before deal settlement.

S&P said that the specified timelines should be considered as minimum standards, encouraging issuers who distributed documents earlier in the month to continue doing so.

The rating agency said that delays in analyzing deals and granting ratings could occur if an adequate amount of time is not given to review the transaction documents, specifically the operating documents on which the ratings are based. A comprehensive review of these documents is a necessary component in protecting investors from legal as well as structural features that might not be in accordance to S&P's rating criteria. S&P added that if its rating is not included in a particular transaction, it could be due to deal documents being sent without enough time to complete analysis before the closing date.

Analysts also noted that esoteric mortgage products - such as reverse mortgages, tax liens, servicer advances, mortgage risk transfers and deals with market value components - might require extra time to review documents considering the product's complexity.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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