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An Analytical Approach To Bond Insurer Representation And Warranty Put-Back Claim Recoveries Apr 11
Standard & Poors, April 2011
Abstract
Over the past few years, bond insurers have paid several billions of dollars of claims on insured residential mortgage loan securitizations that have defaulted. Subsequently, the insurers have contended that the securitized loans failed to meet the representations and warranties the sellers and servicers made with respect to them. So now, the bond insurers are pursuing their own claims (put-backs, in industry jargon) against the loan sellers and servicers--seeking reimbursement of at least $3.3 billion. And the insurers are recording these expected recoveries (booked put-back recoveries) in their financial statements. What remains unanswered is how large--and how material--the insurers' ultimate put-back recoveries will be. Our approach to addressing put-back claims in our analysis takes into account our view of a...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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