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ARCHIVE | Criteria | Structured Finance | RMBS: Guidelines For The Use Of Automated Valuation Models For U.K. RMBS Transactions Sep 05
Standard & Poors, Sep 2005
Abstract
Property valuation is a key driver in Standard & Poor's credit assessment of mortgage portfolios for RMBS transactions. This credit assessment estimates the likelihood of default (the foreclosure frequency) and the amount of loss on default (the loss severity) for each loan in the portfolio. The proportion of the loan to the property value (the LTV ratio) is a major factor in determining the probability of borrower default and the magnitude of loss severity. More specifically, a higher LTV ratio results in greater loss severity and higher probability of default. A valuation carried out by a surveyor is based on a physical inspection of the property. In contrast, an AVM is a desktop model that excludes any physical check of...
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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