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Report Discusses S&P's Views On Freezing Interest Rates On U.S. Subprime ARMs
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Publication Date:    Dec 06, 2007 12:09 EST

Report Discusses S&P?s Views On Freezing Interest Rates On U.S. Subprime ARMs
Primary Credit Analysts:
Monica Perelmuter, New York (1) 212-438-6309;
monica_perelmuter@standardandpoors.com
Waqas I Shaikh, New York (1) 212-438-6318;
waqas_shaikh@standardandpoors.com
Secondary Credit Analysts:
Susan E Barnes, New York (1) 212-438-2394;
susan_barnes@standardandpoors.com
Michael Stock, New York (1) 212-438-2611;
michael_stock@standardandpoors.com
Media Contact:
Adam M Tempkin, New York (1) 212-438-7530;
adam_tempkin@standardandpoors.com
Publication date: 06-Dec-07, 12:09:34 EST
Reprinted from RatingsDirect 





NEW YORK (Standard & Poor's) Dec. 6, 2007--Freezing interest rates on U.S. 
subprime adjustable-rate mortgages (ARMs) could have a negative impact on 
certain U.S. first-lien subprime residential mortgage-backed securities (RMBS) 
unless they also lead to offsets in default frequency or loss severity, 
according to a commentary published today by Standard & Poor's Ratings 
Services.
     Standard & Poor's supports appropriate loss mitigation strategies to 
prevent foreclosures and allow subprime borrowers to remain in their homes. By 
extending the initial interest rate that homeowners paid during the fixed-rate 
period of their hybrid ARM loan terms, the potential for payment shock may be 
mitigated, thereby potentially reducing the risk of default. However, as a 
possible consequence of these actions, there may be a corresponding reduction 
in excess spread that was initially incorporated into our ratings analysis. 
Although loan modifications that extend the mortgage's fixed-rate period may 
result in lower defaults, the reduction in excess spread may offset the 
benefits of lower defaults resulting in diminished investor protection.
     The article, "Standard & Poor?s Views On Freezing Interest Rates On U.S. 
Subprime ARMs," was published Dec. 6, 2007, and is available on RatingsDirect.
     The report is available to subscribers of RatingsDirect, the real-time 
Web-based source for Standard & Poor's credit ratings, research, and risk 
analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, 
you may purchase a copy of the report by calling (1) 212-438-9823 or sending 
an e-mail to research_request@standardandpoors.com. Ratings information can 
also be found on Standard & Poor's public Web site at 
www.standardandpoors.com; under Credit Ratings in the left navigation bar, 
select Find a Rating, then Credit Ratings Search. Members of the media may 
request a copy of this report by contacting the media representative provided.

Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during the ratings process.

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