The Impact of the FDIC's and FHA's Mortgage Loan Rescue Programs on RMBS Loss Expectations - Special Report - 2008/12/04 - Moody's Global Credit Research

Report title: The Impact of the FDIC's and FHA's Mortgage Loan Rescue Programs on RMBS Loss Expectations

from Moody's Global Credit Research
8 page (3605 word) report published Dec 04, 2008

Price $550.00 available for immediate download

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...The FDIC's loan modification proposal has th e potential to help a significant number of distressed borrowers and, if successfully an d widely implemented, is likely to reduce cumulative losses for mortgage loans under lying U.S. RMBS. In contrast, mortgage lender/investor and mortgage servicer interest in the FHA's Hope for Homeowners (H4H), in its current form, may be limited and its volumes small. Therefore, it likely will have much less of an impact on cumulative losses. The details of the programs are still evolving, which could change our observations. A major strength of the FDIC loan modificati on proposal (FDIC Program) is that it bal- ances incentives for the key participants in a mortgage: borrower, servicer and investor. The program provides strong motivations for investors to participate, through loss shar- ing with the U.S. government if the modified loan defaults. Unlike the FHA program, the outstanding loan principal amount is not written down, thereby allowing investors...

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Moody's Investors Service, a leading global credit rating, research and risk analysis firm, publishes credit opinions, research, and ratings on fixed-income securities, issuers of securities and other credit obligations. Credit ratings and research help investors analyze the credit risks associated with fixed-income securities. Ratings also create efficiencies in fixed-income markets and similar obligations, such as insurance and derivatives, by providing reliable, credible, and independent assessments of credit risk. For issuers, Moody's services increase market liquidity and may reduce transaction costs.

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