ARTICLE: The Role and Impact of Credit Rating Agencies on the Subprime Credit Markets

For their part, the rating agencies generally have stated that incidence of mortgage delinquencies in 2006 far exceeded their original credit loss expectations, particularly for subprime mortgages. In the past, their expectations had been more conservative than the actual loss experience. They have noted several factors that seem to have caused the unexpected losses: fraud in the mortgage origination process; deterioration in loan underwriting standards; and finally, lending standards quickly became more restrictive thereby making it more difficult for over-leveraged borrowers to re-finance.


Testimony: Before the U.S. Senate Committee on Banking, Housing and Urban Affairs September 26, 2007