New York-Hours after Standard & Poor’s warned it may cut the credit rating of more than $12 billion in bonds backed by risky home loans; another agency downgraded its rating on hundreds of similar securities.
Both S&P and Moody’s Investors Service said they made the moves because borrowers are missing mortgage payments at levels much higher than anticipated.
The concern is significant because the bonds-many sold by some of Wall Street’s biggest banks-represent a principal source of financing for the housing market. Lower ratings for mortgage-backed bonds could cause a domino effect that might ultimately strangle what until this year was a major propel lent of home prices: easy access to money.
Moody’s lowered its rating on 399 of the bonds, known as residential mortgage-backed securities, and said it may down-grad 32 more. All of the bonds were issued in 2006.
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