NEW YORK & LONDON - (Business Wire) Fitch Ratings is strengthening its originator review program across all global structured finance sectors. In addition to management meetings for all sectors, Fitch will perform file reviews on all asset classes deemed to be high risk in order to better identify areas of concern. Fitch will decline to rate the transaction if Fitch cannot get comfortable with their origination practices. Fitch will also include commentary about the originator in its presale report.
'Loans originated under less rigorous procedures and without stringent risk controls in place will experience higher defaults and losses over time, with current market conditions only serving to exacerbate those issues,' said Senior Director Mary Kelsch. 'The increased risk caused by operational weaknesses often is not apparent in the collateral characteristics, but definitely can affect pool performance.'
The originator evaluation determines Fitch's ability to rate a transaction as well as to determine the necessary adjustments to the credit enhancement levels based on the originator's operational risks. Fitch combines the qualitative originator review with its detailed loan and pool analysis in rating structured finance transactions. Fitch's review focuses on several factors of an originator's operations including:
--Company and Management Experience;
--Sourcing/Acquisition of Assets;
--Underwriting/Credit Evaluation and/or Due Diligence;
--Asset Valuations;
--Risk Management/Quality Control.
Fitch provides more detailed discussions of its originator review process for structured finance sectors in the form of a special report. 'Global Structured Finance Originator Evaluations' is available at www.fitchratings.com under the following headers:
Structured Finance then Operational Risk Group then ABS then Special Reports
Structured Finance then Operational Risk Group then CMBS then Special Reports
Structured Finance then Operational Risk Group then RMBS then Special Reports
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
Mary Kelsch, 212-908-0563, New York
Robbie Sargent, +44 (0)20 7682 7565, London
Gregg Kohansky, +44 (0)20 7682 7491, London
Natasha Vojvodic, +612 8256-0350, Sydney
or
Media Relations:
Sandro Scenga, 212-908-0278, New York
Email: sandro.scenga@fitchratings.com
Julian Dennison, +44 020 7682 7480, London
Email: julian.dennison@fitchratings.com
