Fitch Ratings has introduced criteria for representations and warranties (reps & warranties) in U.S. residential mortgage-backed securities transactions that list reps & warranties needed in RMBS transaction documents in order for Fitch to rate the transaction. The report also addresses the financial strength needed of the provider of the reps & warranties.
Fitch has divided the list of reps & warranties in RMBS transactions into two categories: Tier I and Tier II. Tier I consists of reps & warranties that every RMBS transaction must include in order for Fitch to rate the transaction. Tier II comprises additional beneficial reps & warranties, the agency explains. If these are not present, the transactions could be rated by Fitch if sufficient credit enhancement is present.
Adequacy of credit enhancement for lack of Tier II reps and warranties will be evaluated on a case-by-case basis.
The full report is available at www.fitchratings.com.
Source: Fitch Ratings