Morningstar Credit Ratings Publishes Alert about Effect of Colorado Flooding on Non-Agency Residential Mortgage-Backed Securities
HORSHAM, Pa., Oct. 7, 2013 /PRNewswire/ -- In response to the Federal Emergency Management Agency's (FEMA) declaration of the flooding in Colorado as a major disaster, Morningstar Credit Ratings, LLC published its first edition of Alerts on Non-Agency Residential Mortgage-Backed Securities (RMBS). These Alerts are special reports that serve to explain the impact of certain market events that affect the non-agency RMBS market.
Federal aid is available for individual assistance in nine counties—Arapahoe, Clear Creek, El Paso, Jefferson, Logan, Adams, Boulder, Larimer, and Weld—and the latter four counties are also eligible for public assistance. According to the Morningstar RMBS Alert, approximately 50,000 homes securing 4,756 RMBS transactions are located in these counties. This equates to a $9 billion outstanding balance, or 1.08 percent of the entire non-agency RMBS universe. More than 75 percent of the affected houses were securitized between 2005 and 2007.
"Although the overall exposure of non-agency RMBS properties to this event is relatively small and insurance proceeds should be available to cover some of the losses, investors should be aware of the potential effect on individual securities, especially prime securities with less credit support. Morningstar's analysis shows that exposure to affected non-agency RMBS properties could be as high as 34 percent of current senior credit support," Brian Grow, managing director, Morningstar Credit Ratings, said.
The Morningstar RMBS Alert on the Colorado flood is available here.
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Morningstar Credit Ratings, LLC is a Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured credit research and ratings, including commercial mortgage-backed securities (CMBS). Morningstar Credit Ratings offers a wide array of services including new-issue ratings and analysis, operational risk assessments, surveillance services, data, and technology solutions.
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Morningstar, Inc. is not an NRSRO and its credit ratings on corporate and municipal issuers are not NRSRO credit ratings.
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