Fitch Releases Rating Criteria for Construction Bridge Loan Securitization in Mexico.CHICAGO & MONTERREY, Mexico -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. published today its new criteria report for rating Construction Bridge Loan Securitizations in Mexico. The report provides detailed information on Fitch's rating process and key elements of rating differentiation between transaction structures and originators/servicers. The Criteria Report is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: 'Mexican Low-Income Housing Construction Bridge Loan Securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. Rating Criteria' and is available at www.fitchratings.com. The continuous development of the Mexican housing market requires that criteria be updated accordingly. The dynamic economic environment has lead to changes in construction profile and targeted homebuyers. In addition, some originators/servicers have invested more in servicing technology and process than others, with clear differences in portfolio management procedures and asset performance. The new criteria also recognizes the latest developments of the housing market in Mexico, of which we include the increased construction and sales cycle, an increase in inventory levels in specific states, the potential for a decrease in new mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real outside of the INFONAVIT/FOVISSSTE scope, and the continued commitment of the Federal Government in reducing the housing deficit. While the macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. factors are key considerations in Fitch's risk assessment, Fitch's criteria reflects the credit quality and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. standards of the underlying seller/servicers, the credit quality of each individual housing development and the overall diversification levels of the portfolio. The updated criteria has incorporated certain concentration matrices which will drive the overall expected default rate for each portfolio. These matrices provide a minimum level of protection and consider three main variables associated with portfolio diversification Portfolio diversification Investing in different asset classes and in securities of many issuers in an attempt to reduce overall investment risk and to avoid damaging a portfolio's performance by the poor performance of a single security, industry, (or country). : project concentrations, developer concentrations and state concentrations. Other variables, such as the percentage of low income versus middle income, the percentage of vertical versus horizontal projects and the tenor of the underlying loan, are also incorporated into the expected default rate of the portfolio. Finally, the updated criteria directly link the rating of the transaction to the rating of the underlying seller/servicer. Fitch believes the criteria report will bring more transparency to the process of rating Construction Bridge Loan Securitization transactions in Mexico. It provides detailed information on the variables affecting expected default rates, rating-specific stress scenarios on defaults and recoveries, and cash flow modeling assumptions. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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