Moody's Investors Service put the primary and special servicer ratings of Bank of America (BAC: 13.15 -1.13%) on review for possible downgrade after the nation's largest bank suspended foreclosure cases in 23 states to amend faulty affidavits.
Analysts said possible delays in foreclosures and longer real-estate owned timelines, as well as legal challenges to completed foreclosures and reputational risk for the banks' servicing operations led to the review. The deterioration of the company's collections, loss-mitigation, and timeline-performance metrics also prompted Moody's to initiate the review. Other factors that prompted the ratings agency's action include the relatively low level of modifications and high modification re-default rates on loans in Bank of America serviced residential mortgage-backed securities.
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